eBay Bucks the Tide

Bucking a tide of red ink in dot com earnings across the country, online trading giant eBay Inc. Thursday posted pro forma net earnings of $34.9 million or 12 cents per share on record revenues, beating analysts’ estimates of 10 cents a share.

The San Jose, Calif.-based company reported fully diluted third-quarter net income was $18.8 million or seven cents per share, up from $15.2 million or five cents per share a year earlier.

Business remained strong despite the economic downturn, and revenues were a record $194.4 million, a 71 percent increase over the $113.4 million reported in the same period a year ago.

The company said it now believes that fourth quarter net revenues could approximate $200 million to 210 million, or about $5 million higher than its previous financial guidance. eBay raised its pro forma EPS expectation for the fourth quarter to between 11 cents and 12 cents per diluted share.

“In these extraordinary times, we continue to be impressed by the strength and resiliency of our user community,” said Meg Whitman, president and CEO of eBay. “We’re continuing to see sustained growth across our U.S. and international markets, deeper penetration into many vertical categories and expanded adoption of our fixed price trading formats.”

eBay users transacted a record $2.355 billion in gross merchandise sales during the third quarter, representing 74 percent year over year increase from the $1.355 billion reported in the same period a year ago.

Buy It Now, Half.com and eBay Stores trading formats contributed more than 16 percent of total gross merchandise sales in the third quarter, up sequentially from 11 percent a year earlier.

And in a bright spot for the world of online advertising, revenues from third party advertisers increased to nearly 13 percent of net revenues from a 10 percent level a year ago, eBay said.

“Great job, that’s what people were expecting,” one analyst was quoted as saying after the report came out.

eBay closed Thursday at $59.06, up $1.97. At mid-day it had traded as high as $59.67. Whitman said in a television interview on the earnings report that the events of Sept. 11 cost the company about $5 million in revenue for the third quarter as e-commerce slowed temporarily.

Even with the improved forecast, eBay stock was down $4.31 in pre-open trading.
Lehman Brothers’ Holly Becker was widely quoted as saying the company’s quarter was “very strong,” and growth was “solid.” “However, there was not enough good news to move the stock higher.”

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