eBay meets target, splits stock but price tumbles

Did someone say 'irrational exuberance'?

Despite coming in the results predicted, eBay stock fell 11 per cent yesterday.

Why? The online auction monopoly reported great numbers: gross income rose 44 per cent to $935.8m and net income rose from $157m a year ago to $226m. The revenue figure exceeded analysts' consensus estimate of $934m. eBay also rewarded investors with a two-for-one stock split. However, Wall Street had expected profits a penny higher per share, and also punished the company for a less bullish outlook than the one it wanted to hear. Analysts cited the company's high stock price as a measure of expectations - it's quadrupled since 2003.

Over fiscal year 2004, eBay earned $3.27bn, up from $2.17bn in 2003. The company expects the coming year to gross between $4.25bn and $4.35bn, while Wall Street analysts' high end expectation is $4.5bn. PayPal continues to be a nice little earner, taking in over $200m. Most of eBay's growth is now outside the United States, and the company has earmarked $200m to crack the Chinese market.

Stock fell 11 per cent to $91 in after hours trading. ®

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