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Technology Stocks : eBay - Superb Internet Business Model -- Ignore unavailable to you. Want to Upgrade?

To: Selectric II who wrote (7342)	1/20/2005 7:56:43 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 7772

How many brick and mortar stores would complain about $15.95 a month for rent? Don't forgot the utilities. <gg> I seriously doubt that EBAY is going to lose much business with their subscription fee increases. The stock got hammered in the aftermarket yesterday. biz.yahoo.com EBay Profit Misses Street Forecast Wednesday January 19, 11:18 pm ET By Lisa Baertlein SAN FRANCISCO (Reuters) - EBay Inc. on Wednesday missed Wall Street's earnings expectations for the first time in at least three years, sending its shares down nearly 12 percent and taking other Internet stocks lower. EBay said key holiday sales got off to a slow start in its core U.S. and German markets, and the weak dollar unexpectedly hurt results, although the company beat its own projections. Investor disappointment was compounded by eBay's well-established record of blowing past estimates. EBay's fourth-quarter net profit rose 44 percent to $205.4 million, or 30 cents a share, from $142.5 million, or 21 cents, a year earlier. Excluding items, eBay's profit was 33 cents a share, 1 cent shy of analysts' average expectation. "I think investors are just used to eBay beating the Street numbers, not just by a little but by a lot," said Stephen Leeb, president of Leeb Capital Management. Janco Partners analyst Martin Pyykkonen said U.S. results revived a nagging concern about eBay: "It makes me ask the question: Is the U.S. market getting a little saturated?" Analysts were also concerned with rising advertising and marketing costs in the quarter. Net revenue rose to $935.8 million from $648.4 million. Analysts on average had expected revenue of $934.4 million and profit of 34 cents a share, according to Reuters Estimates. The analysts' estimates were higher than eBay's fourth-quarter outlook issued in October, calling for revenue of $915 million and earnings of 32 cents a share. The company said it decided to bump up 2005 investments in key areas, particularly China and PayPal, from $200 million to $300 million, and it would sacrifice some short-term earnings growth with an eye on long-term expansion. Of that amount, $100 million -- or about 2 percent of eBay's expected global revenue -- is earmarked for China. "In our judgment this is the right thing to do right now," eBay Chief Executive Meg Whitman said on a conference call with analysts. EBay has not said when it expects to make money from its business in China, where competition is stiff but opportunity is seen as large. "It's not a slam dunk that they're going to be as dominant in China" as they are in the United States, where eBay's virtual lock in the market contributes to its perception as a safe haven among Internet stocks, Pyykkonen said. Michael Koskuba, who helps oversee about $1.4 billion at New York-based Victory NewBridge, including about 1 million eBay shares, said eBay is on the right track by making the 2005 investments. "I believe that the business model is still very much intact. They're making the appropriate investments overseas where they're seeing considerable growth," Koskuba said. For the current first quarter, eBay forecast revenue of $1.01 billion to $1.03 billion and earnings excluding items of 34 cents to 35 cents a share, below analysts' consensus forecast of 40 cents a share, according to Reuters Estimates. EBay forecast 2005 revenue of $4.25 billion to $4.35 billion and earnings excluding items of $1.48 to $1.52 a share. Analysts polled by Reuters Estimates had forecast 2005 revenue of $4.37 billion and full-year earnings of $1.62 a share, excluding items. EBay, based in San Jose, California, also announced a two-for-one stock split, payable Feb. 16 to shareholders of record on Jan. 31. "I think the Street has gotten a bit ahead of them this quarter and for the 2005 year." said Pyykkonen, who has a $90 price target on eBay shares. EBay shares had already been moving lower since the beginning of the year as some investors reconsidered the Internet auctioneer's valuation after a strong run in 2004. The company's shares tumbled after hours to $91.01 from a close of $103.05 on Nasdaq.