After the bell yesterday, online auctioneer and Motley Fool Stock Advisor selection eBay (Nasdaq: EBAY) posted decent but unspectacular third-quarter results. The company saw revenues rise 37% year over year to $1.1 billion. Meanwhile, GAAP profit jumped 40% to $255 million or $0.18 per share.
Following the announcement, eBay shares, which have rallied off April lows just above $30 and were up 4% to $42.01 at Wednesday's close, fell 6.5% to $39.27 in after-hours trading.
eBay showed strong growth across the board. Domestic marketplace net revenues climbed 29% to $449.5 million, while international business jumped 43% to $408.9 million. The company's payment business grew net revenues by a similar 44%, to $247.1 million.
Going forward, eBay hopes to jumpstart its slowing growth through acquisitions. The company closed its $2.6 billion purchase of Skype last Friday, and last week announced the $370 million buyout of VeriSign's (Nasdaq: VRSN) online payments unit to extend the reach of eBay's PayPal merchant business. PayPal account holders can currently make payments on sites including Apple's (Nasdaq: AAPL) iTunes and Motley Fool Rule Breakers pick Overstock.com (Nasdaq: OSTK).
eBay expects Q4 revenues of $1.245 billion to $1.285 billion, which includes $35 million from Shopping.com and $20 million from Skype. Excluding Shopping.com and Skype, the guidance includes a $10 million increase from the company's previous forecast "reflecting strong business momentum." In addition, the company expects to post a GAAP profit of $0.16 per share, factoring in $0.04-per-share dilution from the Skype acquisition.
That puts fiscal 2005 guidance at a total of $4.47 billion to $4.51 billion in net revenues, with a GAAP profit of $0.74 per share. Looking to 2006, the company expects to earn $0.81 to $0.86 per share on a GAAP basis -- including $0.12 of dilution from the Skype acquisition -- on revenues of $5.7 billion to $5.9 billion, which includes $200 million in revenues from Skype.
The stock is somewhat heftily priced at about 48 times 2006 earnings. While the merits of the Skype acquisition -- the largest in eBay's history -- can be debated, I think a good case can be made for eBay's long-term future. It looks as if Fools in general agree: Following our recent Dueling Fools feature on eBay, roughly 76% of Fools picked the bull case as the winner, while only 17% preferred the bear case for the company.
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Fool contributor Jeff Hwang owns shares of eBay and Overstock.com.
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