'Still the Gorilla': eBay's Q1 Beats the Street

Shares jump on word of gains in revenue, profit and growth at PayPal; no fee hikes this year

The news was all good for eBay today. The company announced first quarter earnings that beat Wall Street expectations and assured analysts that its forecast for the rest of the year would be on the high end of their predictions, according to Reuters.

Shares of eBay jumped as much as 6% after the company posted a 52% jump in net profit on a 27% revenue increase, led by growth in its core auctions business and the rising prominence of international sales.

"I would say it was a very strong quarter across the board," eBay CEO Meg Whitman said in an interview. "We are actually accelerating our organic growth rate, excluding the impact of foreign exchange and acquisitions."

"Overall it was a good report card," Martin Pyykkonen, an analyst with Global Crown Capital, told the news agency. "The full year (revenue forecast) is up $150 million," he said. "That's a nice bump considering they still have three quarters to go in the year."

Merchant services, the PayPal unit that supplies online payment services to Web sites beyond eBay's own properties, reported payment volumes grew 51% to $4.38 billion.

Competition from rival merchant payment system Google Checkout appears to be continuing to help drive PayPal's own growth, Whitman said. "Amazingly enough, we had 51% growth. The interest in this category is helping (PayPal)."

This strong earnings report comes on the heels of fee increases last year, including a rise in fees for sellers of fixed price items, which eBay instituted late last year as a way to reduce clutter on the site.

"They're still the gorilla," Rachel Wakefield told Bloomberg. Wakefield is a portfolio manager for Portland, Oregon-based Coldstream Capital Management in Portland, Oregon, who helps oversee more than $1 billion including EBay shares. "I just don't see anywhere else the sellers can go in spite of the price hike."

Though the auctioneer might still be the primo primate, one upcoming legal battle may alter the company's domain. Ina Steiner details more on AuctionBytes.