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eBay Rises 7% Overnight on Earnings

Oct 20 2010

eBay Rises 7% Overnight on Earnings

The online auction business eBay rose over 7% in after-hours trading on Wednesday after a better than expected earnings report. Profit for the third quarter rose 23% compared to a year ago. The main earnings driver for the company was its online transaction processor PayPal. Current quarter estimates were also increased by the online auction operator which made investors snap up shares quickly.

The company earned 33 cents a share or $432 million in the last quarter compared with 27 cents in the same quarter last year. With the exclusion of one item the number was actually 40 cents a share, beating analyst’s earnings estimates of 37 cents. With the sale of Skype, the company’s revenues were soft at a 1% increase (year-over-year). Analysts were expecting a dip in revenue but the company could have brought in 10 percent more in sales without the business sale affecting the overall numbers.

Total payment volume for PayPal and Bill Me Later moved higher 26 percent for the quarter. The billing services have bolstered earnings for the company as the auction site performance has been mediocre. Revenue for eBay itself, excluding the billing services, rose 3 percent. Volume of items auctioned rose 3 percent for the quarter and active users rose also by 4 percent.

The company now estimates fourth quarter profit to be 37 to 40 cents and revenue to be in the range of $2.39 to $2.49 billion. These estimates are better than previously expected. eBay CEO John Donahoe was optimistic about the Holiday season during the conference call. Other points of interest offered in the call included lower up-front seller fees and more buyer protection.

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