eBay Shows Its Age

There’s an old saying on Wall Street that trees don’t grow to the sky, but eBay came pretty darn close.

Until last night, that is.

eBay began to look like a mature business for the first time in the fourth quarter, and investors responded by sending shares of the online auction king 19% lower on Thursday.

eBay posted impressive 44% growth in the fourth quarter, but earnings came in lower than analysts were expecting, and the company warned that the first quarter may also come in shy of estimates. With costs rising faster than revenues, eBay’s meteoric growth rate may finally be slowing.

“The company had to spend more than expected on marketing to hit these results,” wrote Merrill Lynch. “This could mute some of the earnings leverage going forward.”

For a stock priced for sky-high growth, that’s bad news for eBay shareholders.

But the ride sure was fun while it lasted.

Stocks followed eBay lower on the day.

The Nasdaq tumbled 25 to 2045, the S&P 500 lost 9 to 1175, and the Dow fell 68 to 10,471. Volume rose to 1.69 billion shares on the NYSE, and was unchanged at 2.24 billion on the Nasdaq. Decliners led 22-10 on the NYSE, and 21-9 on the Nasdaq. Downside volume was 74% on the NYSE, and 73% on the Nasdaq. New highs-new lows were 66-32 on the NYSE, and 46-50 on the Nasdaq.

After the close, Emulex , KLA-Tencor , Synaptics , Hutchinson , Harmonic and CheckFree beat estimates. Scientific Atlanta missed revenue estimates.

During the day, Qualcomm fell 8% on a warning.

Macromedia soared 22% after raising guidance.

Symantec fell 3.5% on its results, while QLogic edged 2% higher after beating estimates.

Extreme and F5 jumped on their results.

Rambus and SCO surged on favorable court rulings.

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