Updated from 8:27 a.m. EDT

After a welcome return to old habits,

eBay

(EBAY) - Get Report

is waiting to see if Wall Street's heart can be turned.

But despite a huge opening rally in the

Nasdaq

, shares of the online auctioneer recently were off 8 cents to $33.03. Among brokerages, Morgan Stanley added a penny to its 2005 per-share earnings estimates.

Wednesday night, eBay posted consolidated GAAP net income of $256.3 million, or 19 cents a share, for the first quarter, on a 36% rise in net revenue to $1.032 billion. On a pro forma basis, eBay's profit came in at $275.5 million, or 20 cents a share.

Analysts polled by Thomson First Call had expected 17 cents a share in profit on $1.031 billion, under generally accepted accounting principles. A year ago, eBay posted a profit of 15 cents a share on net revenue of $756 million.

"We saw a strong revenue performance combined with a focus on containing costs, including sales and marketing costs," said Rajiv Dutta, eBay's CFO, in a conference call. "We achieved this while pursuing the investment goals we achieved last quarter."

Those numbers may not be where many investors would like them to be, in order to feel bullish about eBay this year. But if nothing else, eBay made a strong case it's taking investor concerns to heart. Analysts had been especially concerned about weakness in eBay's two largest and most mature markets, the U.S. and Germany. CEO Meg Whitman tried to show that eBay is addressing both.

"We did see a slow start in January in the U.S., and the team took really decisive action and moved very fast," Whitman said on the call. "By mid-February, we were beginning to see a pickup, and we exited

March strongly. All the choices they made -- the strategy realignments and the optimization of marketing -- really helped." Whitman noted that employees got bonuses in the first quarter, something that was denied in the previous one.

Whitman said the company is trying to be as aggressive in Germany, but it may take some time. "We are seeing slower growth in Germany than we would like," she said. "We're focusing on initiatives there that worked for us in other markets, such as online marketing, natural search optimization and product innovation. And I think you'll see renewed strength in the German market."

eBay also worked to improve its operating margins. A quarter ago, eBay said its income from operations had fallen to 30.4% of sales and warned of further pressure as the company invested hundreds of millions of dollars in future growth opportunities such as China and PayPal. This quarter, eBay's operating profit recovered to 32.5%. Much of that improvement came from cutting back on sales and marketing costs, which fell to 29% of sales in the first quarter from 26% in the previous quarter.

At the same time, eBay said it's already seeing strong growth in China, even if its contribution to the company's bottom line is incremental.

"Our initiatives of investing in marketing and product development are paying off," said Whitman. "In the first quarter, our China site added a record 1.8 million new users, more than any other site in our international portfolio. Those users and millions more generated approximately $100 million in gross merchandise value, a jump of more than 70%."

Also encouraging for investors was that eBay nudged up its estimates for the full year. The company guided its 2005 consolidated net revenue to between $4.270 billion and $4.360 billion and its GAAP earnings per share to between 71 cents and 73 cents. Three months ago, eBay said net revenue would be between $4.25 billion and $4.35 billion and EPS would be between 68 cents and 70 cents.

For the second quarter, eBay says consolidated net revenue will be between $1.025 billion and $1.05 billion and EPS under GAAP would be 16 cents.

In general, eBay showed that it is capable of navigating periods of slower revenue growth. The 36% growth in revenue is below the 43% growth rate in the previous quarter and the 59% rate for the year-ago quarter. Domestic-transaction revenue growth was 19% on the year in the first quarter, down from 24% in the previous quarter, while growth in international transactions slowed to 51% from 64%.

Slowing growth rates aren't necessarily a bad sign, as they are an inevitable aspect of a maturing company. More encouraging for eBay is that international revenue, which at $387 million is less than $2 million behind domestic transactions, is still growing by 51% a year. PayPal's revenue, which made up nearly a quarter of eBay's total revenue, is growing at a healthy 44% rate.

Another bright spot is that eBay is seeing strong growth in advertising and other nontransaction lines of revenue, which grew by 65% to $28.9 million. And growth in registered users is also slowing, but not as dramatically as revenue. That could signal that, even as established sellers leave eBay through disenchantment or just to strike out on their own, there are new sellers showing up on the site.

The number of confirmed registered users grew 41% to 147.1 million and the number of active users grew 34% to 60.5 million. But in the fourth quarter of 2004, those growth rates were a bit higher: 43% and 36%, respectively.

It's too early to say 2005 is going to be a bright year for eBay -- the rate of revenue growth is slowing at an alarming-enough pace to suggest that the company will continue to face significant growing pains. But the year may go down as an important turning point for Whitman & Co., who showed they will do whatever they can to keep investors happy, even as they plan for future growth.