Net Income at EBay, AOL Beats Expectations
Online auction site EBay Inc., one of the few profitable Internet companies, said its earnings climbed ninefold in the third quarter, beating estimates, as it attracted more users and boosted revenue.
Meanwhile, America Online Inc., the No. 1 online service, said its fiscal first-quarter earnings more than tripled as it gained almost 1 million new subscribers and increased revenue from electronic commerce and advertising.
At San Jose-based EBay, profit rose to $2 million, or 5 cents a share, before charges, compared with $199,000, or 1 cent a share, a year ago. Analysts were expecting 3 cents a share. Revenue rose to $12.9 million from $1.46 million.
On Tuesday, EBay shares surged as much as 24%, following a 46% rise Monday on anticipation that the online auctioneer’s third-quarter earnings would beat analysts’ estimates.
Shares of EBay rose $9.13 to close at $82.50 on Nasdaq. The share price has risen more than fourfold since EBay made its initial public offering a month ago at $18.
EBay, which lets Internet users buy, sell and trade items ranging from computer disk drives to Beanie Babies, has attracted investors’ attention because it is profitable, unlike many Internet commerce companies such as bookseller Amazon.com Inc.
The company sells no products of its own, though it charges listing fees and collects a royalty on each sale made by users.
EBay said the number of registered users rose to more than 1.2 million from 851,000 on June 30. It conducted 9.2 million auctions in the third quarter, compared with 6.6 million in the second.
“We expect that the number of EBay users will continue to grow . . . as we work to build our brand awareness through aggressive marketing initiatives,” said Meg Whitman, EBay president and chief executive.
The company’s sales and marketing expenses rose to $5.48 million from $369,000 in the year-earlier period, partly because of the company’s three-year, $12-million marketing agreement with AOL. Other marketing expenses associated with the company’s planned advertising campaign were deferred until the fourth quarter.
AOL said its net income rose to $68 million, or 26 cents a share, from $19.2 million, or 8 cents, in the year-earlier period. That beat the average earnings estimate of 23 cents a share for the quarter ended Sept. 30, according to First Call Corp. Revenue at the Dulles, Va.-based company rose 65%, to $858.1 million from $521.6 million a year earlier. AOL shares rose $1 to close at $122 on the New York Stock Exchange.
America Online boosted its subscriber ranks with the release of its upgraded software, which it distributed everywhere from school cafeterias to gas stations. It offset increased costs by expanding its marketing agreements with companies such as CBS and EBay and ramped up revenue through its 10% flat-rate increase that went into effect in April.
Both EBay and AOL reported results after the close of trading.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
MEDICAL SERVICES:
* Columbia/HCA Healthcare Corp., the world’s largest for-profit hospital operator, said third-quarter profit was nearly flat at $131 million, or 20 cents a share. It was the strongest earnings report since the company became the target of a federal fraud investigation last year, but it failed to meet analysts’ forecasts of 24 cents. Revenue from continuing operations fell 0.7% to $4.58 billion.
* Healthsouth Corp., the biggest U.S. operator of outpatient surgery and rehabilitation clinics, said third-quarter profit jumped 46% to $123.1 million, or 28 cents a share, matching forecasts, as it worked to hold down costs while adding clinics. Revenue climbed 41% to $1.02 billion.
OTHER INDUSTRIES:
* Estee Lauder Cos. said fiscal first-quarter earnings rose 16% to $71.6 million, or 55 cents a share, as strong sales in the Americas offset declines in parts of Asia. The company said total sales rose 11% to $997 million, driven by new lines such as Jane and Aveda and new products in its namesake cosmetics line.
* Manufactured Home Communities Inc., the largest owner of manufactured home communities in the U.S., said its third-quarter funds from operations grew 25% to $16.1 million, or 50 cents a share, in line with expectations, as it benefited from a string of acquisitions. The real estate investment trust, whose chairman is billionaire financier Sam Zell, said revenue soared 63% to $50.8 million.
