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Internet Industry Companies Report Healthy Q3
Revenues
The main Internet industry
public companies are reporting excellent third quarter revenues
for the year 2004. Following are the results for Ebay and Yahoo,
published recently by the press.
Ebay
EBay's third-quarter net income
nearly doubled and revenue climbed 52 per cent, as the company's
international auction business and a strong back-to-school season
counteracted seasonally slow summer months.
Ebay also raised forecasts for
the fourth quarter and for 2004 total revenue and earnings.
Coming off Yahoo's strong results last week, eBay's numbers
suggest that blue-chip internet brands continue to spread their
influence.
EBay saw accelerating growth in
Britain and South Korea, as well as in its computers and books
categories, both related to back-to-school shopping, said Rajiv
Dutta, eBay's chief financial officer.
The internet auctioneer
reported net income of $US182.3 million, or US27¢ a share,
for the period ended September 30, compared with $US103.3
million, or US16¢, a year earlier. The results surpassed the
company's prior prediction of US24¢. Excluding certain
non-cash stock-based compensation and other expenses, eBay said
it earned US28¢ a share, a penny higher than the consensus
estimate of analysts polled by Thomson First Call.
Revenue climbed to $US805.9
million from $US530.9 million. That exceeds the company's prior
forecast of $US770 million and analysts' consensus prediction of
$US779 million, according to Thomson First Call.
The company said its financial
results reflected a slight boost from foreign currency, primarily
related to the euro, as revenue the company received in local
currencies was exchanged into dollars. eBay's revenue reflected a
foreign-currency benefit of $US22.3 million compared with the
year-ago period.
EBay's shares closed at
$US91.36, off $US1.09, or 1.2 per cent, on Nasdaq. In after-hours
trading following the announcement, the stock rose to $US93.50,
according to Inet ATS Inc.
EBay's international auctions
business rose 82 per cent to $US282.3 million. "EBay's really
kicking-in internationally," said Mark Mahaney, an analyst at
American Technology Research. Given that many Europeans take off
for a month during the summer, the strength of eBay's
international business is "really impressive," he
said.
During the just completed
quarter, eBay continued to capitalize on the growth of internet
usage worldwide by completing its acquisition of Baazee.com, an
auction Web site in India, and increasing its stake in Internet
Auction Co., its South Korean auction site, to 99.7 per
cent.
The company's US auctions
business, which provides the biggest portion of its revenue, rose
29 per cent to $US330.6 million.
PayPal, eBay's electronic
payments service, continued to gain more traction worldwide,
generating $US166.3 million, up 56 per cent from a year ago.
PayPal, which experienced an intermittent outage earlier this
month for several days, will not have a material impact on the
company's fourth-quarter results, Dutta said.
EBay chief executive Meg
Whitman apologised on the conference call for PayPal's earlier
unavailability. "The situation was unacceptable. We let our
community down and I want to apologise to our users," she
said.
EBay expects total 2004 revenue
to reach as much as $US3.25 billion, $US65 million higher than
its previous forecast, with per-share earnings of up to $US1.14,
US4¢ a share higher than it had predicted.
For the fourth quarter, the
company said revenue will be around $US915 million, $US29 million
higher than previously predicted. It put per-share earnings of
US30¢, in the line with its prior forecast.
For 2005, the company predicted
revenue of as much as $US4.2 billion and earnings per share of as
much as $US1.42.
Yahoo, Inc.
Yahoo! continues a recent
streak of rising prosperity after the stock market closed on
Tuesday by reporting a third-quarter profit of $253.3 million, or
17 cents per share, up from net income of $65.3 million, or 5
cents per share, at the same time last year.
The results included a $191
million pretax windfall that Yahoo reaped by selling part of its
stake in Internet search engine rival Google, which completed a
closely followed initial public offering in August
Revenue for the period totaled
$906.7 million, a dramatic increase from $356.8 million last
year. Yahoo's revenue fell to $655 million after subtracting
commissions paid to some of its advertising partners. The
revenue, minus advertising commission, was modestly above analyst
expectations.
Yahoo projects revenue for the
forth quarter may rise to as high as $760 million during the
three months ended in December. The mean estimate among industry
analysts had been $730 million. The company's shares have surged
by more than 50 percent this year, bolstered by its steadily
rising profits.
Excluding advertising
commissions, Yahoo averaged 70 cents per active user in the third
quarter, up from 49 cents per active user at the same time last
year. Yahoo ended September with 157 million active users, a 28
percent increase from 123 million at the same time last
year.
The company's success revolves
around Yahoo's Web site, which has been building on its position
as the Internet's most popular destination to become an
increasingly powerful advertising magnet.
Yahoo also has been able to tap
into other Web sites for revenue by distributing text-based ads
through its commercial search engine, Overture Services, which it
acquired a year ago. Marketing revenue in the third quarter
totaled $765.1 million, more than tripling from $245.1 million at
the same time last year - a period when Yahoo didn't own
Overture.
The company also continued its
efforts to develop other revenue sources by selling its online
audience a variety of services, including high-speed Internet
access, fantasy sports leagues and matchmaking.
Yahoo collected $104.2 million
from 7.6 million subscribers during the third quarter. About 4.2
million subscribers generated $79.4 million in fees at the same
time last year. Yahoo expects to have 8.2 million to 8.3 million
subscribers before January.
Some of the growth will come
from online jukebox provider MusicMatch Inc., which Yahoo has
agreed to acquire for $160 million in cash.
Yahoo's recent success, coupled
with the company's propitious $10 million investment in Google
four years ago, has provided it with the financial clout to
continue to expand. The company ended September with $3.1 billion
in cash.
Through the first nine months
of the year, Yahoo earned $476 million, or 32 cents per share, on
revenue of $2.5 billion. At the same point last year, Yahoo
earned $162.9 million, or 13 cents per share, on revenue of
$961.2 million.
Google, Inc.
Internet-search pioneer Google
will report its first quarterly results as a public company
shortly, but there's little agreement on what those results will
be. Analysts' estimates for Google's third-quarter earnings,
excluding several expenses, range from US22¢ to US61¢ a
share, according to Thomson First Call. For 2005, the range of
earnings estimates is equally dramatic: from $US2.01 to $US3.88 a
share.
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