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Technology Stocks : PayPal Inc. - PYPL -- Ignore unavailable to you. Want to Upgrade?

To: zax who wrote (44)	4/16/2002 9:26:42 AM
From: Glenn Petersen	Respond to of 157

EBAY rumored to be interested in acquiring PYPL: PayPal declines comment on possible eBay deal PALO ALTO, Calif. April 15 (Reuters) - PayPal Inc <PYPL.O>, the popular Internet payment service, declined comment Monday on reports that the online auction site eBay <EBAY.O> may consider buying it. News of the rumored deal was reported Monday on the financial cable television station CNBC, although PayPal has long been identified as a likely acquisition target by eBay. PayPal, which went public in a celebrated IPO earlier this year, offers a service for transferring money over the Internet and many of its customers are the same people to buy and sell over eBay. Its cash transfer system is considered by many to be superior to eBay's own online payment service, called Billpoint. EBay also declined to comment on the reports of a possible acquisition. However, an eBay spokesman said the company was happy with the adoption rates of its own Billpoint payment service. EBay does not disclose the total number of people who use Billpoint, but says it is offered as a payment option on about 25 percent of all the auctions hosted on eBay. Separately, PayPal announced on Monday that it would advance by a week the release of its first-quarter results, which will now be reported on Wednesday, April 17. PayPal gave no reason for pushing the date up, although sources close to the company said it was not related to the eBay rumor. Rather they said PayPal simply completed its first quarter accounting early, and was ready to release the numbers 04/15/02 19:59 ET

To: zax who wrote (44)	4/17/2002 7:01:09 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 157

A very impressive performance, though the valuation is still out of line. PayPal outruns target, raises estimate By Bambi Francisco, CBS.MarketWatch.com Last Update: 6:53 PM ET April 17, 2002 cbs.marketwatch.com; PALO ALTO, Calif. (CBS.MW) -- PayPal, the leading online-payment service, exceeded analysts' profit estimates Wednesday and also raised its profit and revenue goals for 2002. Earlier in the week, investors drove up shares of PayPal, amid takeover talk and anticipation that the company would beat Wall Street's projections. Issuing its first quarterly report as a publicly traded company, PayPal of Palo Alto, Calif., said after the closing bell it made $1.2 million in net income, or 2 cents per share. Excluding stock-based compensation expenses and other one-time charges, the company's after-tax income would be $4.3 million, or 7 cents per share. PayPal (PYPL: news, chart, profile) does not have to pay taxes until 2004. Analysts had expected PayPal to earn 4 cents a share. As for its revenue, PayPal topped the consensus estimate of $46.3 million, with sales totaling $48.8 million. The company attributed the quarterly results to an increase in the number of accounts. It added 28,000 a day in the quarter, bringing its total registered account base to 15.4 million. PayPal earns a broker's fee of 3.3 percent of total payment volume. It then pays an average of 1.1 percent of total payment volume to process the transactions. It appears PayPal maintained its lead as the dominant payment service on EBay, while proving that it is making progress in expanding its services to other businesses. According to PayPal's release, the company "achieved further penetration of the online auction market; an estimated 72 percent of the auctions on EBay (EBAY: news, chart, profile) listed PayPal as a payment option in the first quarter of 2002." But PayPal also said total payment volume of auction-related transactions were now 61 percent vs. 64 percent in the fourth quarter of last year. Total payment volume of non-auction related transactions grew to 39 percent from 36 percent in the fourth quarter. It's unclear what types of businesses are using Web payments as the means to exchange money or accept payments. PayPal's CEO, Peter Thiel, would only say that the transactions conducted were by a "distributed universe of people." Legg Mason analyst Scott Devitt believes that the transactions are likely being made by merchants already selling certain products on EBay, but have separate Web sites to sell other goods. Looking ahead Looking ahead, PayPal raised its second-quarter revenue estimates to $52 million and $53 million, which would result in a pro forma after-tax profit of between 7 and 8 cents. For the full year, revenue is estimated to range $220 million to $230 million. Analysts had projected $216 million in 2002 revenue. PayPal expects to earn 34 to 36 cents a share for the full year, vs. analysts' estimate of 30 cents a share. Ahead of the news, shares of PayPal rose 6 percent to $25.38 in regular trading. Shares jumped 30-plus percent since the start of the week, amid speculation the company could be a takeover target. Early this week, a broadcast report said EBay and PayPal held and then aborted discussions about merger last week. Addressing speculation earlier this week about an EBay and PayPal combination, PayPal's Thiel said on a conference call following the release that PayPal is a "standalone business." He did not outright deny or comment on whether the companies were speaking, but he did add: In the end, we'll do what makes sense for shareholders." One analyst asked Thiel to offer some color on what type of synergies the combined companies could have should the two combine. Thiel would not elaborate. But one synergy Legg Mason's Devitt points to is the improvement in margins that EBay could have by allowing its customers to maintain balances in their online payment accounts, much like PayPal offers now. That's because PayPal generates 100 percent gross margins from transactions funded through PayPal balances as opposed to credit-backed transactions. Twenty-three percent of payment volume on PayPal came from customers maintaining a PayPal account. PayPal does not hold onto these funds, however. The funds are held by a third party, which allows PayPal to avoid being regulated as a bank. PayPal raised $70 million when lead banker Salomon Smith Barney brought the company public on Feb. 14 in an initial public offering priced at $13. Bambi Francisco is Internet editor of CBS.MarketWatch.com, based in San Francisco.