On Oct. 18, eBay (NASDAQ:EBAY) released third-quarter earnings for the period ended Sept. 30.

  • Revenues exceeded analyst estimates by 1.36%, but EPS missed those estimates.
  • The PayPal and Skype businesses led to 31% growth in revenues.
  • EPS increased by $0.02 due to the 10% increase in net profit.
  • The operating margin was driven lower by the inclusion of the Skype business.
  • Cash flow was reduced by expenses related to data-center and software investments to support capacity expansion.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$1,429

$1,449

$1,106

31.0%

Net Profit

--

$281

$255

10.2%

EPS

$0.24

$0.20

$0.18

11.1%

Diluted Shares

--

1,426

1,387

2.8%



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

78.21%

81.87%

(3.66)

Operating Margin

23.40%

32.27%

(8.87)

Net Margin

19.39%

23.06%

(3.67)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$3,224

$3,069

5.0%

Accounts Rec.

$367

$274

33.7%



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$56

$43

30.3%

Long-Term Debt

$0

$0

N/A



Learn the ways of the balance sheet.

Cash Flow Highlights

Q3 2006

Q2 2005

Change

Cash From Ops.

$522

$492

6.2%

Capital Expenditures

$137

$70

94.2%

Free Cash Flow

$385

$421

(8.5%)



Find out why Fools always follow the money.

Related companies:

  • Amazon.com (NASDAQ:AMZN)
  • Akamai Technologies (NASDAQ:AKAM)
  • Overstock (Nasdaq: OSTK)

Related Foolishness:

Akamai is a Rule Breakers selection . Overstock is a former recommendation of Rule Breakers and Hidden Gems. eBay and Amazon areStock Advisorrecommendations. The Fool has a newsletter for almost every type of investor.

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