eBay Catches a Quiet Bid

Shares rally meekly into a broader market downturn.
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Updated from April 18

Shares of

eBay

(EBAY) - Get Report

were up modestly in early Thursday trading as the broader market's downturn offset its solid first-quarter earnings report.

The stock was recently up 17 cents to $34.62.

eBay said Wednesday that it earned $377 million, or 27 cents a share, on net revenue of $1.77 billion.

A year earlier, eBay reported earnings of $248.3 million, or 17 cents a diluted share. Revenue came in at $1.39 billion.

Excluding items, the company earned $460 million, or 33 cents a share, in the latest quarter. On that basis, analysts were expecting earnings of 30 cents a share on revenue of $1.72 billion.

For the second quarter, the company said it expects to earn between 31 and 33 cents a share on revenue of between $1.75 billion and $1.8 billion.

The Street had expected earnings of 31 cents a share on $1.75 billion.

For the full year, the company said it expects to earn $1.30 to $1.34 a share on revenue of $7.2 billion to $7.45 billion. Analysts had forecast EPS of $1.29 on revenue of $7.24 billion.

When announcing its fourth-quarter results, eBay had said it expected to earn $1.25 to $1.29 a share on revenue of $7.05 billion to $7.3 billion.

The company also said it had purchased about 10 million shares of its common stock at a total cost of about $333 million during the quarter. It may purchase up to an additional $2 billion of common stock through January 2009 under its stock repurchase program.

"I would characterize the quarter as very strong across the board," eBay CFO Bob Swan said in an interview. "We are feeling pretty good about the rest of the year."

The rate of growth in eBay's core auction business slipped sequentially, however. eBay's marketplaces business reported revenue growth of 23% year over in the first quarter. In the fourth quarter of 2006, it had posted a growth rate of 24%.

"Our marketplace business across Europe -- in the U.K. and Germany -- is not quite where we want it to be," Swan said.

eBay's PayPal payment service and Internet telephony company Skype posted year-over-year revenue growth rates of 31% and 123%, respectively.

Shares of eBay have gained nearly 20% over the quarter.