eBay Earns Nearly $35M, Tops Estimates in Q3

Online auctioneer eBay (Nasdaq: EBAY) topped analyst estimates in the third quarter ended September 30th, and raised estimates for the current quarter as well.

The company on Thursday reported earnings before charges of US$34.9 million, or 12 cents per share -- topping the 11 cents expected by analysts -- along with a 71 percent increase in revenue to $194.4 million. Net income totaled $18.8 million, or 7 cents per share.

"In these extraordinary times, we continue to be impressed by the strength and resiliency of our user community," said eBay president and chief executive officer Meg Whitman. "We're continuing to see sustained growth across our U.S. and international markets, deeper penetration into many vertical categories and expanded adoption of our fixed-price trading formats."

eBay raised its forecast for fourth-quarter revenue by about $5 million, saying it now expects to generate $200 million to $210 million, even taking into account the "changing economic environment" and its "Auction for America" charity auction to benefit victims of the September 11th terrorist attacks.

However, eBay chief financial officer Rajiv Dutta said the company's guidance was tempered somewhat to reflect a weak economy, and would have been higher if economic conditions looked better.

Growth Factors

The company attributed its revenue gain to strong growth across all its business lines. In a conference call with analysts and investors, Whitman said that "these results clearly demonstrate the continued vibrancy" of the eBay business model.

Though the September 11 attacks held business back initially, buyers are returning, Whitman said. She added that while the Auction for America project is also "diverting" some goods away from the regular eBay auctions, the size of the impact is "modest."

Holiday Push

eBay executives said the company plans to promote itself as a key holiday shopping destination, with newspaper inserts, TV ads and a catalog that will be distributed in 40 offline markets.

Chief operating officer Brian Swette said the push will be "the strongest and most integrated effort ever." Through its alliance with AOL Time Warner (NYSE: AOL), he said, eBay will be able to use TV spots during the holiday season.

There will also be an online catalog showcasing "hard-to-find" items like hot toys that are at risk of selling out, as well as more "value-oriented" items that eBay expects will appeal to consumers strapped for cash in a weak economy, Swette said.

The overall aim, he said, is to promote eBay as a "mainstream" holiday shopping destination.

User Base Doubles

eBay said it had about 37.6 million users at quarter's end, up 99 percent from a year earlier.

The company's shares fell in after-hours trading, slipping $1.14 to $55.95. During regular market hours, investors had bid the stock higher.