Strong Q4 Right-Sizes eBay’s Year

The president and CEO of eBay  called 2006 a year of
“successes and challenges.” But for Meg Whitman and the online auction company she helps run, the successes trumped the challenges in the form of earnings results for the fourth quarter and full year.

The online auction giant posted a profit of $346 million (25 cents per diluted share), up by 24 percent from its year-ago quarterly profit of $279 million (20 cents per share). The results outpaced expectations.

Revenues jumped by 29 percent to $1.7 billion compared to the same, year-ago quarter of $1.3 billion. Shares were up by 12 percent to $33.70 in after-hours trading following the results today.

For the full year, eBay raked in $6 billion in sales, a growth of 31 percent compared to 2005 when it took in $4.6 billion. Full-year net income, at $1.1 billion (79 cents per diluted share), rose by a narrower margin, 4 percent, compared to its 2005 profit of just over $1 billion, (78 cents per diluted share).

Whitman maintained optimism in her comments on an investors’
conference call, calling 2006 a “pivotal” year for eBay, but one
which the company “emerged stronger for the challenges faced and
lessons learned.”

According to Whitman, top challenges for the company include
business in China and integrating 2005 acquisition Skype.

“Skype monetization efforts are not developing as fast as we hoped,”
Whitman said.

But she said the company is encouraged, however, by a triple-digit
increase in the number of Skype users. Skype had 171 million
registered users at the end of 2006, representing a 129 percent
increase from the 75 million users at the end of 2005.

As for China, Whitman admitted that eBay had many “lessons to learn.”
One of them was that eBay’s initial investment in China was a failure.

But again, Whitman said she was hopeful the company’s partnership
with the local TOM online in Asia would provide new insights into the Chinese
lifestyle as well as access to over 75 million mobile users.

eBay continued buying back stock, at a cost of $1.7 billion
throughout 2006. It said it may shell out another $300 million to buy
even more common shares and has set aside an additional $2 billion
for stock repurchases over the next two years.

The company said it expects consolidated net revenues for 2007 to be in the
range of $7 billion to $7.3 billion.