eBay reports better than expected results

Posted Oct 18th 2006 4:43PM by Melly Alazraki
Filed under: After the Bell, Earnings Reports, eBay (EBAY)

eBay Inc. (NASDAQ: EBAY) just posted a better-than-expected 10% rise in quarterly profit to $281 million, or 20 cents per share. Excluding stock-option costs, profit grew 30 percent to $332 million, or 23 cents a share. Revenue (net) rose 31% to $1.45 billion showing rebound in auction and strong growth from PayPal.

Yet, the company issued a revenue outlook for 2007 that is below Wall Street forecasts. Expected fourth-quarter revenue should be in a range of $1.62 billion to $1.68 billion. The Street was expecting a range of $1.60 billion to $1.73 billion. Revenue growth range from 17%-21% when analysts expected 29%.

eBay shares initially rose in after market trading by about 2%, but are are now posting less significant gains from today's close of $28.49.

Print this

Reader Comments (Page 1 of 1)

10-18-2006 @ 7:51PM

Jgee said...

I think eBay will go nowhere now. Synergies are not created among the companies within eBay.

10-18-2006 @ 7:51PM

Randy Smythe said...

Hi Melly, I figured I would comment over here before Sigh and Ann take over. (I'm just playin') Your comment about 2007 is interesting and may keep the stock from rising substantially. I think investors should be "cautiously optimistic" for the near term in regards to eBay. I will be interested to see how many analysts upgrade the stock based on this report.

10-18-2006 @ 7:59PM

Melly said...

Hi Randy,
I'm not sure there would any upgrades. The projected growth rates for 2007 that eBay provided are much lower than the ones analysts were looking for. However, they did provide with some excellent numbers and improvements.
You're right that they kept trying to "hedge" what they were saying regarding 2007, presumably because they want better indications of different business sectors.
Just from a quick analysis, yes, the numbers were good but they haven't answered all the questions in my opinion, especially about plans in China and monetizing Skype.

10-18-2006 @ 8:43PM

sigh said...

Hey Randy Bro!

Wassup? Let me give you a lesson in investing. I fired my broker 5 years ago and vowed never to listen to another analyst and media pundit PERIOD.

I do my own research with another successful investor friend. We have combined the best investment methodologies of Warren Buffet, Peter Lynch, Charles Munger, Brian Greenwald, Bill Miller and Benjamin Graham.

Here is my track record for last 4 years. Believe it or not.

Merck - bought at 26 and now its $43
Chicago Mercantile Exchange - b at 65 now $500
Archipelago/New York Stock Exchange - b at 30 now $73
United States Gypsum - b at $5 now $46
Ebay - b at $24 now $29

If you look at these companies at time of purchase you will find a common theme:

1) Severely undervalued stock due to over reaction in the market due to lawsuits or competitve threats and hence wall street and so called media pundits screaming sell!

2) Strong underlying financials NO DEBT and Strong Cashflow

3) Strong Management

I suggest you really think long and hard my friend et ilk about your investment thoughts or lack of. Remember "It's all in the sphagetti saunce and then some"

10-19-2006 @ 5:32AM

Fruit Helmet Cat said...

Melly, I was disappointed in the lack of stores discussion but I found so much of it gave me a better understanding of what analysts look for. Paypal is a cash cow and I feel expanding their presence in segments outside of ebays site will prove very profitable for them. Even though paypal is an Ebay company, I have always looked at them independently

It does seem to me that despite their lowered Q4 guidance, that it seemed not a problem. I am learning as I go, maybe I am wrong but with a reduction questions that come to mind mind are what activities will you do to ensure to get the most out of the quarter that you can? I hope they rectify the search so that buyers can have more confidence in it.