EBay tops expectations as earnings surge 50%

EBay Inc. reported Wednesday that second-quarter profit surged 50%, easily beating Wall Street expectations thanks to strong sales on online auctions, the automobile classified section and e-commerce sites such as Shopping.com.

But analysts remained concerned about the declining number of items for sale on the site. EBay shares fell 55 cents in extended trading after results were released. Its shares closed down 20 cents at $34.05 in regular trading.

San Jose-based EBay earned $375.8 million, or 27 cents a share, compared with $249.9 million, or 17 cents, in the second quarter of 2006.

Revenue for the period ended June 30 was $1.83 billion, up 30% from $1.41 billion in the year-earlier quarter.

Not including $79.6 million in stock-based compensation expenses and other one-time charges, EBay earned $471.1 million, or 34 cents a share, up 34% from a year earlier.

On that basis, which does not comply with generally accepted accounting principles, analysts polled by Thomson Financial expected EBay to earn $447.18 million, or 32 cents a share, on revenue of $1.78 billion.

“We were very pleased across the board -- from the core EBay business to merchant services at PayPal, which was a standout performer,” Chief Executive Meg Whitman said.

Revenue from PayPal, EBay’s electronic payment service, was $432.3 million, up 31% from a year earlier.

Its Skype division, which allows customers to place long-distance calls over their computers, reported revenue of $89.13 million, up 102%. It’s the second consecutive quarter of profitability for Skype.

Despite rosy financial performance, the company hasn’t been able to maintain the number of listings on its e-commerce sites. Instead, it’s wringing more money out of a shrinking number of listings.

Individual listings dropped 2% from a year earlier, and EBay store listings plunged 25%. Individuals and “power sellers” who operate EBay stores listed 559.1 million items worth $14.46 billion in the quarter.

Executives said in a conference call that revenue would continue to outstrip growth in listings. That trend troubles some analysts, including Rick Munarriz, who researches technology companies for Motley Fool.

“There comes a point where the end user isn’t going to like being nickeled-and-dimed, so this could backfire,” Munarriz said.