EBay Announces 2-for-1 Stock Split as Earnings Soar

Online auctioneer EBay Inc. announced a 2-for-1 stock split Thursday as it posted double-digit increases in revenue and profit for the second quarter, driven by growth in its international business and the strong performance of its PayPal online payment business.

EBay, which has $2.5 billion in cash, posted $509 million in revenue for the quarter, up 91% from the same period a year ago and up 7% from the previous quarter. Net income of $110 million, or 33 cents a share, beat Wall Street estimates by 2 cents and was up 5% from the previous quarter and double last year’s net income of $54 million.

EBay’s shares jumped $1.60 to $115.74 on Nasdaq before the earnings report was released, but retreated to $110.45 in after-hours trading.

“You have the combination of high-speed Internet and the rapid adoption of digital photography playing into EBay’s sweet spot,” said analyst Sandy Sanders of Boston-based Evergreen Investments, which owns EBay shares but does not do business with the San Jose company.

Helping drive the growth is EBay’s expansion into other countries, including China last quarter. International revenue from fees it collects from auctions grew 146% from a year ago to $155 million, while U.S. revenue grew 45% to $242.4 million. Meanwhile, revenue from its PayPal online business, which EBay purchased last year, totaled $99 million.

EBay also announced a 2-for-1 stock split, which executives said would make the stock more affordable.

“It was important to us to bring this to an optimal trading range for a broader base of investors,” EBay Chief Financial Officer Rajiv Dutta said.

Also Thursday, PayPal agreed to pay $10 million to settle charges that it aided in illegal offshore and online gambling activities, the U.S. attorney in St. Louis said.