Online marketplace eBay Inc. disappointed Wall Street on Wednesday by leaving its outlook for revenue and earnings in 2006 below analysts' expectations, and its shares fell more than 5 percent.
Net income for the fourth quarter rose to $279.2 million, or 20 cents per share—beating analysts' average forecast by 2 cents per share—up from $205.4 million, or 15 cents per share, a year earlier.
"The quarter was fine. The company didn't increase 2006 guidance and I think that would be viewed as a negative," said Scott Devitt, an analyst with brokerage Stifel, Nicolaus & Co.
Shares of eBay fell in after-hours trading following the results. The share decline added to a 2.1 percent fall during regular-session trading ahead of the quarterly report amid a broad sell-off sparked by Yahoo Inc.'s disappointing results on Tuesday.
EBay 's quarterly net revenue rose 42 percent to $1.33 billion as the company enjoyed accelerating revenue growth in its two largest markets, the United States and Germany, and better-than-expected revenue growth in recent acquisitions Skype and Shopping.com.
"In the fourth quarter—across the board—this business did extremely well," eBay Chief Financial Officer Rajiv Dutta told Reuters in an interview. "There were no weak points in this business."
"We had tremendous momentum and we are very bullish about 2006," Dutta said, as he reaffirmed eBay 's October forecast that revenue would grow to between $5.7 billion and $5.9 billion in 2006, with profit in line with prior forecasts.
"We are not changing that guidance for 2006," he said.
The earnings outlook was on the lower end of Wall Street expectations. Analysts' average forecast for 2006 profit, excluding one-time items, is $1.01 per share, according to Reuters Estimates.
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