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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (43674)	10/29/2001 7:43:17 PM
From: stockman_scott	Read Replies (11) \| Respond to of 65232

eBay Reaffirms Guidance, Growth Targets Monday October 29, 6:55 pm Eastern Time By Andrea Orr PALO ALTO, Calif. (Reuters) - eBay Inc. (NasdaqNM:EBAY - news), the fast-growing Internet auction site, Monday reaffirmed forecasts that it could achieve some extremely aggressive growth goals over the next four years, but investors took pause over its forecast for earnings next year, and sent the stock sharply lower. eBay, with an annual revenue growth rate of more than 50 percent, stands in stark contrast to almost all of its neighboring companies in Silicon Valley. Company officials told analysts on Monday it expected earnings per share of 70 cents to 73 cents, up from 46 cents to 47 cents expected for 2001. Despite the sharp increase it forecast, some analysts noted that that would be at the low end of the current consensus forecast. Henry Blodget of Merrill Lynch wrote in a research report those results could be ``modestly negative'' for the company's stock, although the company's long-term picture still looked good. EBay's shares fell $4.48, or 7.9 percent, to close at $52.52, and continued to drift lower in after-hours activity. The single number that drew some concern, came in the middle of a long list of forecast numbers, which seemed to suggest the company was hitting all its targets to expand at a rate that would help it reach $3 billion in revenue in 2005, up from $725 million to $739 million in 2001. The company said it expected 2002 revenues to reach $1.05 billion to $1.1 billion. In a research report prior to the meeting, however, U.S. Bancorp Piper Jaffray analyst Safa Rashtchy said that 2002 revenue guidance of anything less than $1.1 billion could imply that eBay would have more trouble reaching its long-term goal of $3 billion by 2005. That oft-stated $3 billion target has become somewhat infamous for the growth across all business segments it would require at a time that eBay has already enjoyed several years of rapid growth. However, in a question-and-answer session at the end of the analyst meeting, eBay Chief Executive Meg Whitman said the company was feeling ``increasingly confident'' about meeting its long-term goals. Whitman declined to supply new guidance through 2010. However, analysts noted that the company's ability to meet targeted growth goals may not be the only thing spooking investors. Blodget said the stock could prove to be expensive even assuming the company meets all the most optimistic guidance. Blodget said eBay is currently trading at 65 times 2002 earnings. SOURCES OF GROWTH While most of the analyst meeting on Monday was devoted to issues that have been previously discussed -- such as eBay's expansion into new overseas markets and new product categories -- the company did provide some additional information on the sources of its future growth. It said it plans to aggressively work to attract more business in the cars and computers categories, two relatively new divisions to the auction site that was originally devoted to small ticket collectible items. During the past two years cars and computers have shown some of the strongest growth on eBay, and officials said they expect to be able to build market share significantly, partly by picking up more business from traditional outlets such as used-car dealers. To that end, eBay is working to incorporate financing into the car bidding process and add features so that would-be buyers can place bids based on monthly payments rather than outright prices. For all the varied items that are currently sold on the site, the company said it still sees ample room to expand into new categories. It said that one of the new areas where it sees promise is tickets and gift certificates. ``Ticket sales has to be the most inefficient market in the world,'' said Jeff Jordan, senior vice president at eBay. The company recently entered a deal with the Salt Lake City Olympic Committee to sell Olympic events tickets over its site and said it sees more room to expand into other areas. Company officials also said they expected to reach $35 billion in gross merchandise sales in 2005, up from about $9 billion expected this year. Gross merchandise sales do not represent actual revenues earned by eBay, but rather the total volume of goods sold on its Internet auction site.