EBay Beats Estimates, Outlook Slightly Disappointing

Web marketplace eBay Inc. (EBAY) posted Wednesday a better-than-expected 28 percent increase in quarterly net profit, but it forecast future profits at or below Wall Street estimates.

Its shares, which have fallen 43 percent so far this year on slowing revenue growth and declining margins, initially rose 1 percent in after-hours trade.

Janco Partners analyst Martin Pyykkonen said the forecasts suggested eBay was still focusing on investment, sacrificing some profit growth.

"The fundamentals weakened but did not fall off a cliff," said American Technology Research analyst Mark Mahaney, who has a "hold" rating on eBay shares.

San Jose, Calif.-based eBay had first-quarter net income of $256.3 million, or 19 cents per share, compared with net income of $200.1 million, or 15 cents, last year.

Excluding items, the company had a profit of 20 cents a share. Analysts, on average, had expected net income of 17 cents a share and earnings excluding items of 18 cents a share, according to Reuters Estimates.

Revenue rose to $1.03 billion from $756.2 million a year earlier, fueled by growth in its core eBay business and its online payment service PayPal, to land in line with analysts' consensus revenue target.

EBay forecast second-quarter net earnings of 16 cents a share — a penny lower than analysts' consensus estimate. Its call for earnings excluding items was 18 cents a share, matching analysts' target.

The San Jose, California-based company forecast third-quarter net earnings of 16 cents to 17 cents per share and earnings excluding items of 18 cents to 19 cents per share. Analysts polled by Reuters Estimates had called for net earnings of 17 cents a share and earnings excluding items of 18 cents.

The company, best known for its auctions of everything from classic cars to Pez candy dispensers, has been haunted by growth concerns since its fourth quarter results showed signs of slowing acceleration in its key markets of the United States and Germany. That sparked a one-day stock drop of 19 percent.

Wednesday Shares of eBay closed up 94 cents, or nearly 3 percent, at $33.11 on the Nasdaq. They rose to $33.44 in extended trade on the Inet electronic brokerage.