eBay Bids on Itself

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Man, those analysts are good. For the third time in the last four quarters, Wall Street has nailed eBay's (Nasdaq: EBAY) earnings power. For its June quarter, eBay earned $0.17 a share, or $0.24 a share before certain expenses.

The company closed out the quarter with $4 billion in cash and investments, and it's putting half of that to good use with a $2 billion repurchase plan. You can't really blame the company. With the shares trickling down to two-year lows, you too would be all over that like Honus Wagner baseball cards for a nickel.

Shares inched higher on the news, but it was a mixed bag any way you slice it. The company's flagship auction marketplace business grew by just 22%, despite a 35% uptick in listings and a 29% spike in registered users. Ideally, one would love to see results outpace the traffic gains. The company announced fee rate hikes for eBay Store sellers, but that isn't the solution here; fee revenue is already growing faster than the gross value of the merchandise that is being swapped (I'll dig deeper into that aspect on my Saturday "A Fool Looks Back" piece).

The same thing happened over at the faster-growing PayPal subsidiary. The number of accounts soared 44% higher, yet total PayPal net revenue grew by only 39%.

Skype bucked the trend. Net revenues marched 26% higher on a 20% increase in registered users. It's nice to see eBay milking more out of each Skype user. At first I was perplexed to see that Skype was the slowest-growing verb in eBay's tri-verb portfolio when it comes to attracting new users. Then I realized that the Skype data was sequential instead of year over year as it was in the other categories.

The hot and cold performance was lost on the market. When your shares have been battered the way that eBay's shares have been, even so-so news is good news.

Instead of having to worry about whether Google (Nasdaq: GOOG) is launching a PayPal killer or if Yahoo! (Nasdaq: YHOO) is making inroads overseas, we see an eBay that is humming along to market maven specs.

Predictably so.

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Longtime Fool contributor Rick Munarriz is a satisfied eBay user, with 167 positive feedbacks to show for it. Rick is a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. He does not own shares in any of the companies mentioned in this story.