Ebay profits soar

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The Guardian

Owen Gibson

Friday July 25, 2003

Ebay is becoming 'a way of life', according to the chief executive of the online auctioneer, which today announced a doubling of profits in the past quarter.

Profits at the company, one of the few to emerge from the wreckage of the dotcom crash with a profitable business, leapt 102% to £68m in the second quarter of the year while revenues jumped 91% to £316m.

Ebay, which allows users to buy and sell all manner of goods in the online equivalent of a car boot sale, also said it would pay £6.2m to settle allegations that its PayPal online payment service violated US law by providing services to online gambling sites.

The company said it called a halt to the practice after buying PayPal, which allows users to pay each other via a secure credit card transaction, for £1bn last year.

But the continued growth still was not enough to placate Wall Street investors, who continue to fret that they are in danger of creating a second internet bubble by heavily backing the handful of successful dotcoms.

Ebay's shares fell sharply after the results were announced because investors were concerned they did not beat expectations by as much as in recent quarters.

Fellow internet giant Yahoo! suffered a similar phenomenon earlier this month when it too reported a doubling in profits.

But the Ebay chief executive, Meg Whitman, said it was inevitable revenues would become more seasonal to match the retail business at large as Ebay became more mature.

"Ebay is a way of life for an ever growing number of people," she said, adding that she had seen the company grow to the point where it now had a community of users that rivalled the population of the world's 15th biggest nation.

The company raised its 2003 revenue outlook by about £15m to £1.29bn and also announced a two-for-one stock split that would raise more cash.

In an effort to reduce lingering worries about online fraudsters targeting Ebay users, it also announced the introduction of a $500 payment protection plan for PayPal users.

The service is expected to be extended to its UK and global sites in time for the busy Christmas period, along with a new feature that will automatically charge buyers' credit cards once a transaction is complete, speeding up the process and reducing the number of abandoned purchases.

· To contact the MediaGuardian newsdesk email editor@mediaguardian.co.uk or phone 020 7239 9857

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