eBay Is Spared Market's Wrath

Shares are little changed despite last night's guidance bummer.
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Soft guidance from

eBay

(EBAY) - Get Report

wasn't translating into excessive pain for its shareholders of the tech sector Thursday morning.

Shares of the online auctioneer were down only 6 cents to $44.38 in premarket trading. They were down as much as 5% late Wednesday.

Wednesday, eBay, of San Jose, Calif., beat fourth-quarter estimates, posting a pro forma profit of 24 cents a share on revenue of $1.33 billion. Analysts surveyed by Thomson First Call had forecast a 22-cent profit on sales of $1.29 billion.

But the good news stopped there. The largest Internet auction site projected a 2006 pro forma profit, excluding certain costs, of 96 cents to $1.01 a share on revenue of $5.7 billion to $5.9 billion. Analysts were expecting a $1.02-a-share pro forma profit on sales of $5.9 billion.

eBay's results add to the concerns that some investors have about whether the rich multiples for tech stocks are justified by their growth prospects. Shares of both

Yahoo!

(YHOO)

and

Intel

(INTC) - Get Report

tanked Wednesday after the companies reported disappointing earnings. Shares of

Google

(GOOG) - Get Report

, which more than doubled last year, dropped 3% after two equity analysts cut their ratings on the search engine giant to a sell.

Later Wednesday, Wall Street favorite

Apple

(AAPL) - Get Report

beat fiscal first-quarter earnings targets but guided toward a weak second quarter. Its shares dropped 5% as well.

"These names have done well, particularly well,'' says Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, N.Y., which owns a small eBay position and sold its shares of Yahoo! ahead of the earnings. "Perhaps expectations got too far ahead. These companies aren't growing at the pace that they used to grow.''

eBay also has raised some fees and lowered others, effective Feb. 22. The company also plans to start a new service in the spring called eBay Express, a site that will offer items that are available for purchase right away, the company said in a statement on its Web site.

For the fourth quarter ended Dec. 31, eBay made $279.2 million, or 20 cents a share, compared with $205.4 million, or 15 cents a share, a year ago.

New listings on eBay's sites soared 35% to 546.6 million, while total listings rose 33% from a year ago to 1.9 billion. Gross merchandise volume, reflecting the value of goods sold on eBay, jumped 22% from a year earlier to $12 billion, the company said.

eBay said revenue rose 39% in U.S. marketplaces, 35% overseas in dollar terms and 48% in the payments business, led by PayPal. Skype revenue was $24.8 million from Oct. 14, when eBay acquired the voice-over-Internet-protocol phone company, through year-end.

"Q4 capped off a remarkable year for eBay," said CEO Meg Whitman in a statement. "We saw accelerating growth and momentum across the board, a testament to the fact that eBay has built the most outstanding portfolio of businesses on the Internet."