eBay Beats Estimates but Stock Takes a Bath - TheStreet

eBay Beats Estimates but Stock Takes a Bath

Shares fall 10 points after hours as sales growth fails to keep pace with subscriber growth.
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eBay (EBAY) - Get Report, the world's largest online auctioneer, today posted quarterly results that topped Wall Street's expectations, solidifying its position as the industry's market leader.

eBay's earnings beat the consensus estimate of analysts polled by

First Call/Thomson Financial

by a penny, excluding one-time events. For the third quarter ended Sept. 30, supplemental net income rose to $3.2 million, or 2 cents a diluted share, from $1.8 million, or 2 cents a share, a year earlier, excluding certain noncash and merger-related costs. Net revenue rose to $58.5 million from $21.7 million a year ago.

The company's stock closed at 152, up 1 1/8. But it plunged to 142 1/2 in after-hours trading on concern that new customers weren't buying the way they used to. eBay recorded significantly lower revenue per user, which implies lower revenue growth for new users, according to Faye Landes, a retail analyst at

Thomas Weisel Partners

. Weisel hasn't underwritten for eBay and Landes has a market perform rating on the stock.

In a statement, Meg Whitman, eBay's president and chief executive, said, "eBay continued to record strong increases in gross merchandise sales and registered users. The eBay community now transacts almost $3 billion per year on an annualized basis on our site." Indeed, gross merchandise sales rose 280% over the last year, to $741 million from $195 million a year ago, and registered users jumped 509%, to 7.7 million from 1.3 million. Additionally, the number of auctions leaped 292%, to 36.2 million from 9.2 million.

Despite its strong numbers, eBay has come under fire over the last year for lengthy service outages, hoax auctions of cocaine and a human liver, among other items, and the unauthorized sale of stock. Plus, the competition has intensified with

Amazon.com

(AMZN) - Get Report

and

Yahoo!

(YHOO)

now in the fray.

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