After last month's analyst day,
third-quarter earnings report after the close of trading Thursday is likely to be somewhat anticlimactic.
After all, how do you top a long-term revenue forecast of $3 billion? How do you wow the Street in a seasonally weak quarter, at a time when the Internet sector (forget it: the entire market) is getting about as much respect as
comeback attempt? How do you avoid duplicating
Answer to all three questions: It will be difficult. Analysts expect eBay to post third-quarter earnings of 4 cents a share, according to
First Call/Thomson Financial
. They forecast revenue of about $107 million. And few expect any major upside for those numbers -- nothing like the whisper numbers that Yahoo! faced, and exceeded, last week. Meantime, eBay's shares have been falling along with pretty much everything else, though they rose fractionally Wednesday after being off 10% early.
If eBay hits its numbers, sales would represent growth of some 82% from the third quarter of 1999 -- faster than the 50% compound annual growth rate needed to reach its goal of $3 billion in revenue in 2005. (
examined eBay's goal in a previous
story.) Investors are also obsessed with sequential revenue growth: $107 million would represent 4% sequential growth, slower than the 14% jump seen in the second quarter.
Give Them What They Want
But investors are more likely to be interested in what the company has to say on its conference call. Some of it is likely to sound awfully familiar to anyone who attended eBay's analyst day last month. "In general, I think there'll be a reiteration of their strategy," says Adria Markus, analyst with
. (Her firm doesn't have ratings, and it hasn't done underwriting for eBay.) At that meeting, eBay outlined how it is continuing to diversify away from collectibles to mass market products like computers and used autos, and how big it sees its slice of those markets.
Projections about 2005 are all fine and good, but if it really wants to make investors happy, eBay will give more information about the progress of three newer lines of business --
, its fixed price site; international operations; and autos, through its agreement with
. The lack of detail about those operations was the only real complaint heard after the analyst day. Especially nice would be if the company raised guidance for next year because of Half.com; analysts feel eBay has so far low-balled its potential.
Would that kind of optimism be enough? Would making its numbers be enough? Valued as highly as it is -- at about 620 times trailing 12 months' earnings -- eBay has a lot to prove on Thursday night, particularly in a market that doesn't seem to be impressed by anything. "We believe the company clearly raised the bar following its recent analyst day," wrote
analyst Holly Becker in a recent note. (She rates eBay a buy, and her firm hasn't done underwriting for the company.)
Analysts and investors always rush to note that, so far, eBay has delivered the goods. There have been no
eBay's hoping that in this uncertain market delivering the goods will be enough.