Updated from 4:32 p.m.

eBay ( EBAY) posted a solid third quarter and named a trusted lieutenant to oversee its big Internet phone acquisition. But investors sold the stock late Wednesday as the company failed to deliver a big boost to guidance.

The world's largest Web auction site posted a 40% profit gain and a 37% rise in sales for its quarter ended Sept. 30. The numbers matched the Wall Street analyst consensus estimates.

San Jose, Calif.-based eBay also named its longtime finance chief, Rajiv Dutta, president of its recently acquired Skype unit and offered fourth-quarter and 2006 guidance that was mostly in line with expectations. But Wall Street roared its disapproval, sending eBay down 7% late Wednesday.

"For some reason, people had their hopes much higher than this, especially for the guidance," said Safa Rashtchy, an analyst with Pipper Jaffray who rates eBay shares as market perform and doesn't own them. "Everything seems to be in line."

For the third quarter, net income rose to $255 million, or 18 cents a share, from the year-ago $182 million, or 13 cents a share. On a pro forma basis, excluding certain costs, earnings were 20 cents a share, a penny ahead of eBay's target and in line with the Thomson First Call estimate. Sales hit $1.1 billion, beating the $1.08 billion target.

"We saw very strong growth across every part of our business," said CEO Meg Whitman in a press release. "It's wonderful to see such strength in our two largest marketplaces, the U.S. and Germany."

"Overall, revenue, profit and cash exceeded our expectations quite strongly," Dutta said in an interview. "It was really driven by the acceleration in the U.S. business and the German business. PayPal overall had an extraordinary quarter."

eBay said gross merchandise volume, representing the value of all successfully closed items on eBay's trading platforms, rose 30% from a year ago to $10.8 billion. Total payments accounts at PayPal rose 53% to 86.6 million, and total payment volume, reflecting the dollar volume of payments initiated through the PayPal system, jumped 44% to a record $6.7 billion.

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