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Online auction company EBay beats expectations as profit increases 10 percent

Online auction company EBay beats expectations as profit increases 10 percent

EBay Inc. reported Wednesday that third-quarter profit increased 10 percent from the same period last year, beating Wall Street's moderate expectations and encouraging executives to raise earnings forecasts for the full year.
The San Jose-based online auction company earned $280.9 million (euro223.95 million), or 20 cents per share, for the three months ended Sept. 30, compared to $254.97 million (euro203.28 million), or 18 cents per share in the year-ago period.
Revenue for the third quarter totaled $1.45 billion (euro1.16 billion), up 31 percent from last year's $1.11 billion (euro0.88 billion) and at the high end of what Wall Street traders had expected.
Excluding charges unrelated to ongoing operations, eBay earned $367.41 million (euro292.92 million), or 26 cents per share, up nearly 24 percent from the same quarter last year, when eBay earned $280.16 million (euro223.36 million), or 20 cents per share.
On that basis, which doesn't comply with generally accepted accounting principles, eBay was expected to earn $342.4 million (euro272.98 million), or 24 cents per share, on sales of $1.43 billion (euro1.14 billion), according to analysts polled by Thomson Financial.
Excluding one-time costs, the company expects a profit of 27 cents to 28 cents per share in the fourth quarter _ traditionally the company's strongest, thanks to holiday shoppers _ on revenue in the range of $1.62 billion (euro1.29 billion) to $1.68 billion (euro1.34 billion).
For all of 2006, the company expects to earn $1.01 (euro.81) to $1.02 (euro.81) per share on revenue in the range of $5.87 billion (euro4.68 billion) to $5.93 billion (euro4.73 billion).
That's slightly more bullish than eBay executives were at the end of the second quarter. In July, the company said it would likely earn 98 cents to $1.01 (euro.81) per share in 2006 on revenue in the range of $5.7 billion (euro4.54 billion) to $5.9 billion (euro4.7 billion).
EBay shares closed Wednesday at $28.49, down 29 cents, or 1 percent, before the earnings report was released. The stock has traded in a 52-week range between $22.83 and $47.86.
EBay's lucrative PayPal division _ a standard platform for online payments, on or off the auction site _ had $350 million (euro279.04 million) in quarterly revenue, up 41 percent from a year ago. PayPal had 123 million users at the end of the quarter.
Internet-telephony subsidiary Skype, which eBay agreed to purchase in September 2005 for at least $2.6 billion (euro2.07 billion), had revenue of $50 million (euro39.86 million) in the quarter, 13 percent more than in the second quarter of 2006. Skype had 136 million registered users at the end of the third quarter. EBay did not provide Skype data for the year-ago period.
For years after the dot-com collapse in early 2000, eBay _ considered one of the most financially conservative companies in Silicon Valley _ enjoyed stellar stock performance and was the envy of its e-commerce rivals.
But in January 2005, eBay announced quarterly profit that failed to meet Wall Street's lofty expectations _ only the second shortfall since Thomson Financial began tracking the company in 2001. The disappointment precipitated an immediate sell-off and the start of a longer-term struggle to revive the share price.
In July, eBay authorized the buyback of $2 billion (euro1.59 billion) in common stock within the next two years. Companies typically repurchase shares to boost share prices, but the strategy sometimes bombs; outside investors may see it as desperate.
Chief Financial Officer Bob Swan said Wednesday that eBay has already completed one-third of the repurchase campaign and believes the company will be richly rewarded when the stock climbs.
"We said we though the current stock price ... was not reflective of the long-term value of the company, so we'd be opportunistic in our repurchase program," Swan said in a phone interview with The Associated Press. "We're taking advantage of current valuations relative to what we believe is the long-term value of the company."
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On the Net:
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