eBay Posts 52% Quarterly Profit Surge

Shares of online auction site eBay gained 2.8% to $35.40 in AH trading yesterday after the company reported a 52% rise in Q1 profit and a 27% rise in revenue on a higher average selling price of auctioned goods, higher fees, stronger international performance and solid growth at PayPal, the company's online payment service. Q1 net income rose to $377 million ($0.27/share) versus $248.3 million ($0.17) a year earlier. Excluding costs, profit rose 34% to $460 million ($0.33/share). On that basis, analysts had been expecting EPS of $0.30. Revenue rose to $1.77 billion from $1.39 billion against an average Street expectation of $1.72 billion. PayPal net revenue grew 31% to $439 million. Overseas revenue was up 38% versus a domestic gain of 18%. The company is not satisfied with results in Germany, where growth is being constrained by eBay's efforts to improve the quality of merchandise offered on the site. eBay raised full-year revenue guidance to $7.2-7.45 billion from $7.05-7.3 billion and its full-year EPS forecast to $1.30-1.34, at the high end of analyst forecasts of $1.27-1.34. In other news, eBay announced it is acquiring search engine StumbleUpon for about $40 million. Google, which also sought to purchase StumbleUpon, has introduced a dice icon on its toolbar that will offer similar functionality.

Sources: Conference call transcripts: Q1 2007, MarketWatch (I, II), SFGate, Bloomberg, Wall Street Journal, Reuters, TechCrunch
Commentary: eBay Finally Stumbles Upon Media Acquisitions • Heading Into Internet Sector Earnings: Buy Yahoo, Hold eBay, Sell Google? • Four Reasons To Buy eBay Now
Stocks/ETFs to watch: eBay Inc. (EBAY). Competitors: Amazon.com Inc. (AMZN), Google Inc. (GOOG), Yahoo! Inc. (YHOO). ETFs: Internet HOLDRs (HHH), First Trust Dow Jones Internet Index (FDN), PowerShares QQQ (QQQQ)

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