ebay posts 25% profit
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bill cobb can eat a bag of dicks World UpdatesThursday January 25, 2007EBay beats expectations as 4Q profit increases 24 percent; stocks jump in after marketSAN FRANCISCO (AP) - EBay Inc. reported that fourth-quarter profit increased 24 percent from the same period last year, trouncing Wall Street estimates and prompting executives to raise guidance for the current quarter. Thanks to scorching holiday sales _ particularly in the United States, the United Kingdom and Germany _ the San Jose, California-based online auction company earned $349 million (euro268.4 million), or 25 cents per share, for the three months ended Dec. 31, EBay reported Wednesday. It earned $279 million (euro214.5 million), or 20 cents per share in the year-ago period. EBay shares increased $1.38, or nearly 5 percent, to close Wednesday at $30 on the Nasdaq Stock Market. After the earnings report was released, shares jumped another $3.80, or nearly 13 percent, in after-market trading. "It was a very strong quarter capping a very strong year,'' eBay President and Chief Executive Meg Whitman told The Associated Press. Fourth-quarter revenue totaled $1.72 billion (euro1.3 billion), up 29 percent from $1.33 billion (euro1.02 billion) in the year-ago period. Excluding charges unrelated to ongoing operations, eBay earned $431 million (euro331.4 million), or 31 cents per share, up nearly 27 percent from the same quarter last year, when eBay earned $340 million (euro261.4 million), or 24 cents per share. On that basis, which does not comply with generally accepted accounting principles, eBay was expected to earn $402 million (euro309.1 million), or 28 cents per share, on sales of $1.67 billion (euro1.28 billion), according to analysts polled by Thomson Financial. Despite the rosy quarter, eBay faces significant hurdles this year, particularly in Asia. Ebay gets about half of its revenues from abroad, a share slowly growing. Last month, eBay announced it would launch a new site for Chinese consumers in a partnership with wireless Internet company TOM Online Inc. The deal essentially erased a four-year-old initiative through eBay's EachNet subsidiary, prompting investors to worry that eBay lacked a coherent strategy for the burgeoning Chinese market. In South Korea, eBay is losing market share to Yahoo Inc.-backed Gmarket Inc., which plans to enter Japan this year and eventually China and the United States. Whitman, acknowledging that successfully expanding in China is key to overall growth, said having a local partner "added an arrow to our quiver in terms of our ability to be successful in China.'' During the holiday quarter, more than 81 million active eBay users exchanged$14.4 billion (euro11.1 billion) in goods, ranging from pricey real estate and computer servers to Pez dispensers and clothing. The hottest sellers last quarter were automobiles and consumer electronics _ namely, Nintendo Co.'s Wii and Sony Corp.'s PlayStation 3 gaming consoles. Whitman said the company raised first-quarter 2007 sales guidance to a range of$1.67 billion (euro1.28 billion) to $1.72 billion (euro1.3 billion). Excluding special items, eBay expects earnings per share to be 28 cents to 30 cents per share. The company also announced Wednesday it would repurchase up to$2 billion (euro1.54 billion) of common stock within the next two years. The aggressive buyback _ a measure of how bullish executives are about the company's growth _ comes after it repurchased 31 million shares for about $1 billion (euro770 million) last quarter. Analysts said the strong quarterly results and the buyback were the strongest signals yet that eBay _ whose stock took a dive in January 2005 and has never recovered _ is finally on an upswing. "I thought they were in a bit of trouble but it looks like they pulled it out,'' said Roger L. Kay, founder and president of research firm Endpoint Technologies. "I'd say eBay has bought itself at least a couple of years here in which they can think about how the enemies are sneaking around the back wall while they're minding the business.'' In 2006, eBay earned $1.13 billion, or 79 cents per share, up 4 percent from $1.08 billion, or 78 cents per share, in 2005. Excluding stock-based compensation costs and other expenses, eBay in 2006 earned $1.49 billion, or $1.05 per share, up nearly 24 percent from $1.2 billion, or 86 cents per share, a year earlier. Annual revenue was $5.97 billion (euro4.6 billion), up 31 percent from $4.55 billion (euro3.5 billion) in 2005. That is higher than the $5.96 billion (euro4.58 billion) from the most optimistic analysts polled by Thomson Financial. Overall, analysts expected eBay to earn $1.46 billion (euro1.12 billion), or $1.02 per share, on sales of $5.91 billion (euro4.5 billion). However, the company faces fraud as a major challenge. An internal survey showed scammers may be denting eBay's reputation, and earlier this month eBay's largest 250 sellers expressed concern during closed-door meetings with executives about the growing number of scams. EBay began a program last year to conceal members' user names on expensive listings, making it harder for con artists to contact losing bidders and goad them into wiring cash for "second chance'' scams. The company is also working to combat organized crime syndicates, reduce counterfeit items and stop "phishing'' scams that steal financial data. "Trust and security must be part of our core competency, and we've got to stay a step ahead _ more than a step ahead,'' Whitman said. - AP
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