Investor Fave eBay Delivers Once Again

Updated from 4:56 p.m. EDT.

Yet again, online auctioneer eBay (EBAY) pleased investors Thursday, posting quarterly earnings that topped Wall Street estimates and boosting revenue projections for the second and third quarters.

Many analysts suspected the company would top estimates, and it did just that. It said first-quarter earnings were 11 cents a share on revenue of $154 million; this compares with the Thomson Financial/First Call consensus estimate of 8 cents a share on revenue of $149 million. In the same period last year, the San Jose, Calif.-based company earned 3 cents a share on revenue of $86 million.

At the same time, the company said revenue over the next two quarters could beat estimates by a total of $10 million to $15 million. The Thomson Financial/First Call second-quarter revenue estimate is $157.7 million.

"In the face of a difficult economic environment, eBay has seen fantastic growth on all fronts," chief executive officer Meg Whitman told analysts in a conference call Thursday evening.

Shares soared Thursday in anticipation of the release, and closed at $49.99, up $4.24, or 9.3%. The stock rallied an added $2.34, or 4.6%, to $52.33 after hours on Instinet.

Driving the company's growth are an aggressive plan to expand internationally and an effort to promote fixed-price sales. In a separate release Thursday, the company announced an expansion of its fixed price site Half.com, a move that many analysts had been awaiting. The company will launch four new categories on the site: consumer electronics, computer equipment, sporting goods and trading cards.

eBay added 7.2 million users during the quarter, and saw gross merchandise sales -- the total value of goods exchanged on the site -- hit $1.98 billion, up 72% from the same period a year ago and up 23% from last quarter. However, the percentage translated to revenue -- the so-called take rate -- declined slightly, to 7.44% from 7.62% in the fourth quarter, despite an increase in commission fees during the quarter. In the conference call Rajiv Dutta, eBay's chief financial officer, attributed the decline to dilution from its international businesses, which generate smaller commission fees.

eBay has maintained its cachet among investors amid the collapse of the Internet economy, mainly because it is a global flea market of sorts with no analog in the bricks-and-mortar world. Its shares are up nearly 50% since the beginning of the year, at a time when investors have fled technology stocks in droves.

>To order reprints of this article, click here: Reprints