eBay Beats Wall Street Expectations

Friday, January 19th 2001, 12:00 am

By: News On 6

SAN JOSE, Calif. (AP) â€” Fourth-quarter profits at eBay Inc. beat Wall Street expectations, as the mammoth Internet auction site said it had added a record 3.5 million users in the last three months of 2000.

In the quarter ended Dec. 31, eBay earned $23.9 million, or 9 cents per share, compared with $3.8 million, or 1 cent per share in the year-ago quarter. Revenues rose 81 percent to $134 million.

Analysts surveyed by First Call/Thomson Financial were expecting profits of 7 cents a share this quarter.

News sent shares of San Jose-based eBay soaring $4.73, or 10 percent, to $51.61 in early trading Friday on the Nasdaq Stock Market.

``We are extremely pleased with the strength of our business and with the tremendous momentum we have going into the new year,'' said Meg Whitman, eBay's president and CEO.

The report came off as exceptionally glowing, considering the recent parade of unmet goals and grim outlooks from e-commerce sites and high-tech companies.

``There's been a lot of questions about almost every other model on the Internet beside eBay, and this quarter they proved they're immune from all the various issues surrounding the Internet,'' said Adria Markus, Internet analyst at Epoch Partners.

EBay said its international growth, new partnerships and the increase in the types of items available on the site has swelled its ranks to 22.5 million registered users, more than twice the 10 million counted at the end of 1999. In the fourth quarter alone, users traded $1.6 billion worth of goods, and eBay said it saw a big bump in sales of holiday items despite a soft season for traditional retailers.

Analysts said that was likely because of the strength of eBay's brand and the value proposition it offers.

``You could make the case that even a slowing economic environment would not be a negative environment for these guys,'' said Steve Weinstein, an analyst with Pacific Crest Securities.

EBay was bullish on its 2001 outlook, saying its recent $120 million purchase of a majority stake in Internet Auction Co. Ltd., a South Korean online bidding site, likely will help push revenue toward $150 million in the current first quarter and $665 million for all of 2001.

In comparison, eBay's revenues for all of 2000 were $431.4 million, a 92 percent increase over 1999. Excluding the effect of one-time charges and stock-related expenses, the company earned $58.6 million, or 21 cents a share, in 2000, up from $18.3 million, or 7 cents a share, in 1999.

EBay said this week it is increasing the fees sellers must pay to auction goods on the site, a move aimed at increasing profits, reducing some clutter and funding future service upgrades.

EBay, which has at times suffered hobbling and costly outages, upgraded its servers last week and will invest significantly in similar improvements over the next year and a half, Chief Operating Officer Brian Swette said.

Markus said she was impressed that eBay's gross margins were higher than expected, with the number of users growing rapidly but the costs of acquiring new customers staying flat.

``They're obviously doing something right in terms of managing efficiencies,'' she said.

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On the Net:

http://www.ebay.com