Sick of disappointing earnings? This might cheer you up.


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, one of the few Internet companies that ekes out a profit, Thursday topped Wall Street's fourth-quarter earnings expectations and boosted 2001 revenue forecasts. Its stock rallied sharply after the sanguine report.

The San Jose, Calif., online auction company reported net income of $23.9 million, or 9 cents a share, on revenue of $134 million. This compares to last year's net income of $3.9 million, or 2 cents a share, on $73.9 million of revenue. Analysts polled by

First Call/Thomson Financial

expected the company to earn 7 cents a share -- the same amount it earned in the third quarter -- on revenue of $125.5 million.

In recent days, many analysts predicted eBay would top Wall Street expectations, and its shares have enjoyed a strong run. Since Jan. 5, the shares have risen nearly 50%, and closed higher Thursday by $3.63, or 8%, at $46.88. In after-hours trading on


, the shares jumped to $50.81.


The earnings news was the second significant announcement to come from the company this week. On Tuesday, eBay said it would raise the fees it charges to list items for auction, prompting a flurry of analyst upgrades and giving investors further confidence in the company's business model.

Perhaps even more significant, the company said it expects to generate revenue of $665 million in 2001, some $35 million above eBay's third-quarter-end guidance. The company attributed the increase to the fee hike and a South Korean acquisition.

"eBay achieved terrific results in Q4," gloated Chairwoman and Chief Executive Meg Whitman on a conference call with analysts and reporters. "We could not be more pleased with our business and the strength of momentum entering 2001."

By nearly all measures, the company exceeded expectations.

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The closely watched revenue-per-user figure increased slightly from the third quarter to $5.96, marking a turnaround after a steady decline in revenue per user. "It certainly makes sense that revenues per user has declined over time as the company has moved beyond its original core user base of (possibly obsessive) collectors," wrote Faye Landes, an analyst at

Sanford Bernstein

, in a recent research note. (Landes has a market perform rating for the stock, and her firm does not have an underwriting relationship with eBay.)

eBay added 3.5 million new users in the third quarter. And gross merchandise sales, the total value of goods sold and a key metric for eBay, reached $1.6 billion, a 79% increase over the fourth quarter of 1999.

One downer for analysts could be the lack of specific guidance the company gave for its so-called emerging businesses. In particular, analysts expected guidance for how its fixed-price site,

, which eBay bought in July, is performing. While the company said the number of visitors to the site skyrocketed, it did not offer specific revenue figures, only saying that had a "small impact" on gross merchandise sales.

"Although listings and traffic are quite good

at, no news on revenues will be perceived as bad news," says Stephen Fitzgibbons, an analyst at

J.P. Morgan H&Q

. (Fitzgibbons rates the stock a long-term buy, and his firm hasn't done recent underwriting for eBay.)

In addition, growth from its auto business,

eBay Motors

, is seen as key for the company to reach its stated goal of $3 billion in revenue by 2005, a prediction the company

made in September and reiterated Thursday. However, the company did not provide revenue figures for the division.

eBay also announced the promotion of two senior executives. Gary Bengier, eBay's chief financial officer, will become senior vice president for strategic planning and development. Rajiv Dutta, currently vice president of finance, will become CFO.