eBay reported Thursday that fourth-quarter revenue increased 81 percent and posted earnings that beat analyst expectations.
Pro forma net income for the quarter was $25 million, or 9 cents per diluted share, on revenue of $134 million. That compares with earnings of $5.1 million, or 2 cents per diluted share, on revenue of $73.9 million in the same period in 1999.
Analysts expected San Jose, Calif.-based eBay to earn 7 cents per share, according to a survey by First Call.
At the close of regular market trading, eBay shares were up $3.63, or
more than 8 percent, to $46.88 on the Nasdaq. The earnings report was issued after the close of regular trading. In after-hours trading, eBay shares were up $3.37 to $50.25 on the Island ECN electronic communications network.
"We are extremely pleased with the strength of our business and with the tremendous momentum we have going into the new year," eBay Chief Executive Meg Whitman said in a statement.
Noting that the company is trading around 130 times projected
earnings for 2001, Merrill Lynch financial analyst Henry Blodget said
eBay's earnings reports this year will be closely scrutinized by
investors. If the company's gross merchandise sales or revenue do
not meet expectations, eBay could take a big hit in its stock
price, he said.
"They have to be solid; there's not big room for error," Blodget said.
One of the important things for eBay is how successfully it can move its auction business into new areas, said Steve Fitzgibbons, a financial analyst with J.P. Morgan H&Q. Although areas such as automobiles and local trading show potential, they have grown slower than expected, he said.
"The big question is, how big can this commerce platform become over
time?" Fitzgibbons said. "If all the things they're getting involved in
work, this has the potential to be an enormous company, but we're not
quite there yet."
eBay's gross merchandise sales--the value of all the goods and
services traded on eBay--reached $1.6 billion during the quarter, up
79 percent from the same period in 1999. Deutsche Banc Alex Brown analyst Jetil Patel, who projected that eBay would post $1.5 billion in gross merchandise sales for the quarter, said he was impressed with the company's showing.
"The concern that people had was that the numbers were slowing, that
their business was slowing in general," Patel said. "I think they've put those fears to bed. This is a pretty impressive performance in a pretty tough industry environment."
eBay announced that Chief Financial Officer Gary Bengier has changed
positions to become the company's senior vice president for strategic
planning and development. Rajiv Dutta, eBay's vice president of finance, will become the company's new CFO.
The auction company added 3.5 million new members during the quarter, bringing its total number of members to 22.5 million. At the end of the fourth quarter in 1999, the company had about 10 million members.
eBay's gross profit margins improved significantly during the quarter,
going from 71 percent of sales in the year-ago quarter to 82 percent of
sales in the fourth quarter of 2000. Gross profit margins represent the
difference between what a company charges customers for its goods and
services and what it pays suppliers for those goods and services. After
a series of site outages in 1999, eBay invested heavily in technology to improve site stability; that investment depressed the company's profit margins.