Online auction giant EBay (Nasdaq: EBAY) reported record fourth-quarter revenue Tuesday of US$219.4 million and pro forma net income of $38.5 million, easily beating analyst expectations.
Bolstered by a strong holiday shopping season, EBay’s quarterly revenue was the highest ever for the company, representing a 64 percent gain over the $134 million generated last year, and was the auction company’s 13th consecutive profitable quarter.
For all of 2001, EBay reported revenue of $748.8 million and pro forma net income of $137.5 million.
Success Breeds Confidence
“Our fourth-quarter results capped off an outstanding year,” said EBay President and CEO Meg Whitman. “We have excellent momentum going into 2002 and feel confident with our long-term strategy, ongoing execution, and the inherent strength of our business model.”
EBay attributed the increase in income to better-than-expected holiday sales in the U.S., strong international growth, and third-party advertising revenue. The company said the best-performing categories in the fourth quarter included EBay Motors, computers, collectibles, sports and toys.
Key Challenge
Some analysts have suggested that despite the company’s strong performance, the biggest dilemma for EBay is meeting investor expectations.
Potential growth categories to keep an eye on in 2002, according to analysts, include consumer electronics, EBay Motors and EBay’s international sites.
In the past, EBay has estimated that revenues will hit $3 billion per year by 2005.
EBay’s stock has held up relatively well in recent weeks. At the close of regular trading Tuesday, EBay shares were at $64.06 per share, up 46 percent from their post-September 11th low. The earnings report was released just after the close.
The Real Test
A number of research reports released earlier this month indicated that online holiday sales were stronger than expected. Online portals such as Yahoo! (Nasdaq: YHOO) and America Online also reported that consumers were spending money on their shopping sites in record numbers.
Still, the most accurate assessment of the success or failure of the e-tail holiday season lies in the e-tail companies’ earnings statements, and EBay is the first big e-tailer to report this year.
Yahoo! is scheduled to release earnings on Thursday and Amazon.com‘s (Nasdaq: AMZN) report is slated for January 22nd.
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Yes, eBay racked up a lot of earnings due to their policies and the way they treated their sellers in the past year. Fee hikes (with a spiraling percentage system that is becoming so unprofitable to sellers that they are leaving in droves), the AFA auction after 9/11 with rules that forced the seller and the buyer to use eBay’s online payment service (Billpoint) to the exclusion of any other payment service (which created ANOTHER source of revenue for eBay), the confusing “Checkout” system that was mandatory (and extremely confusing) until enough people complained and it was rescended,and now eBay is favoring the “corporate seller” instead of the little man.