Updated from April 22.

A standout earnings report Tuesday night gave


(EBAY) - Get Report

shares a jolt on Wednesday, sending its stock price up nearly 5%.

In late morning trading, eBay's shares were up $4.38 to $93.60, above the company's 52-week high. The shares were trading above the company's previous 52-week high of $92 a share.

The stock surge followed eBay's earnings report Tuesday night. Surging revenue enabled the company to almost double its first-quarter earnings.

eBay earned $104.1 million, or 32 cents a share, in the quarter. That was up from $47.6 million, or 17 cents a share, in the year-ago quarter. A 13% jump in the number of the company's diluted shares helped hold down its per-share earnings.

Compared to the prior-year period, eBay's revenue swelled 94% to $476.5 million.

"Q1 was a terrific quarter for eBay, delivering record results across every part of the business," Meg Whitman, president and CEO of eBay, said in a prepared statement. "We are now more confident than ever in eBay's long-term potential across every facet of our business."

eBay raised its guidance for the second quarter and for the year. The company now expects to post earnings of 30 cents a share in the current quarter and 2003 earnings of as much as $1.27 a share. Previously, the company had projected it would earn 27 cents a share in the second quarter and $1.12 for the year.

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Excluding charges such as those related to its acquisition of PayPal and stock-based compensation, eBay expects to earn 33 cents a share in the current quarter and $1.41 for the year. On this pro forma basis, Wall Street analysts had projected the company would earn 32 cents a share in the second quarter and $1.34 a share for the year.

eBay's revenue growth was helped in large part by its overseas auction sites. Revenues from international operations, which includes sites targeting Germany, the U.K., South Korea and Taiwan, grew 166% in the quarter to $137.5 million.

The company's core U.S. business posted strong growth as well. Revenue from the company's eBay.com site hit $234.9 million in the quarter, up 49% from the year-ago period. Revenues from the company's German and U.K. sites grew by 181% and 191%, respectively, in the quarter, company officials said on a conference call with investors and analysts.

Not everything is rosy for eBay, however. A potentially destabilizing force for the company could be a lawsuit slated for trial this week. eBay has said the suit, which involves a patent dispute, could have a serious effect on its business and force it to change its method of operation. Although most patent disputes end in out-of-court settlements, no serious settlement talks are under way currently, according to a spokesman for MercExchange, the company that sued eBay.

Meanwhile, although the company saw its gross profit margin rise with its revenue in the latest quarter, that margin declined as a portion of sales. The company's gross profit margin, which measures the difference between what it charges customers for its services and what it pays to provide them, fell 2.49 percentage points to 80.67% of sales.

eBay attributed the decrease in gross margin in part to PayPal. The online payments company, which eBay acquired last year, has lower margins than eBay's auction services.

But the company more than made up for the decline in margin by cutting operating expenses as a portion of sales. Such expenses, which include sales, marketing, product development and other costs, shrank 4.73 percentage points to 49.58% of sales.

That performance came despite the fact that eBay boosted its marketing expenses 69% to $123.8 million.

The company tried to keep operating costs in line due in part to uncertainties surrounding the war in Iraq, said company CFO Rajiv Dutta. Although the company saw some effect on transactions due to the war, it wasn't enough to throw off its quarter, Dutta said.

Although the company achieved an operating margin of a stunning 31% in the first quarter, Dutta said eBay is not focusing solely on boosting bottom-line margins. Instead, the company plans to invest in product development, infrastructure and customer support to continue to grow its business, he said.

"While these investments will result in lower operating margin in the second quarter, we believe it is imperative that we invest in the business today for growth tomorrow," he said.