NEW YORK (Dow Jones)Shares of eBay Inc. (EBAY) tumbled Friday as the online auctioneer's cautious albeit positive outlook for the current quarter overshadowed its strong thirdquarter performance.
"Some of the Sept. 11 impact will flow into fourth quarter, and so management's increase in fourthquarter targets was less than some had expected," said Henry Blodget, an analyst with Merrill Lynch & Co.
The San Jose, Calif., company said late Thursday that revenue for the current quarter will be between $200 million and $210 million, which the company said was $5 million higher than its previous projection.
Expecting a fundraiser for the victims of the terror attacks to draw off some of eBay's auction commissions, Blodget reduced his revenue estimates on eBay's fourth quarter to $220 million, from $224 million. He also cut his earnings expectation for the quarter by a penny to 14 cents a share.
"We expect the stock to trade off after the (release of its thirdquarter) results, but then rally later in fourth quarter or first quarter," Blodget said. He noted that his revenue and earnings projections for 2002 remain unchanged at $1.1 billion and 85 cents a share, respectively.
Defying the sour economy and the dotcom debacle, the electronic middleman posted a 24% jump in thirdquarter profit to $18.8 million, or 7 cents a share.
Management credited the solid quarter to acrosstheboard growth. The company, which generates the bulk of its revenue through listing and selling fees, now boasts some 37.6 million registered users worldwide.
In addition to hosting online auctions, the company has also started offering space for retailers to sell fixedprice items through its eBay stores. The move puts eBay in direct competition with Amazon.com Inc. (AMZN) and Yahoo! Inc. (YHOO).
"The fixedprice trading continued grow markedly," said Derek Brown, an analyst with WR Hambrecht Co.
He also noted that eBay's gross margin of 82% for the past quarter exceeded his forecast of 80.8%, reflecting the economic scalability of its business model.
Brown reiterated his strong buy rating on the stock and expects it to reach $75 in the next 12 months.
Some other analysts, though, adopted a more pessimistic stance. "The company is cautious on the outlook for the first time," said Safa Rashtchy of US Bancorp Piper Jaffray.
Rashtchy downgraded the stock Friday to neutral from buy, citing a slower business growth expected for eBay in the near term.
In recent trading, eBay shares fell 9.8%, or $5.80, to $53.25, on volume of 11 million. Average daily turnout is 7.9 million. Shares have been as high as $71.30 on June 25 and as low as $26.75 on Dec. 20.
By Lingling Wei, Dow Jones Newswires, 2019382089; Lingling.Wei@dowjones.com
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