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EBay quarterly results surpass expectations

An eBay/PayPal sign is shown in San Jose, Calif.

Paul Sakuma/AP/Paul Sakuma/AP

EBay Inc. reported better-than-expected increases in quarterly sales and profit on Wednesday, driven by growth in its Marketplace and PayPal businesses.

The e-commerce company also edged up its 2012 forecasts, helping propel its shares more than 6 per cent higher to $38 in after-hours trading.

"It's one of their better reports that I've seen in several years," said Colin Sebastian, an analyst at Robert W. Baird & Co.

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EBay shares have gained more than 15 per cent this year, more than double the gain of rival Inc. , on optimism about a growth recovery at its online Marketplace business and an expansion of PayPal from its online roots into physical stores.

"Both PayPal and the Marketplaces were very healthy in the quarter," Mr. Sebastian said. "It's not every quarter that you see both doing well."

That suggests management's strategy of turning around its online Marketplace while expanding PayPal is working.

"Marketplace is improving and PayPal continues to gain market share and that's without any contribution from the offline initiatives," Mr. Sebastian said.

EBay said first-quarter profit was $725-million, or 55 cents per share, compared with $619-million, or 47 cents per share, a year earlier. Revenue was $3.3-billion, up 29 per cent from the same period in 2011.

The company was expected to report earnings of 52 cents per share in the first quarter on revenue of $3.15-billion, according to Thomson Reuters.

EBay forecast second-quarter profit of 53 cents to 55 cents per share and revenue of $3.25-billion to $3.35-billion. For the whole of 2012, the company expects earnings of $2.30 to $2.35 per share and revenue of $13.8-billion to $14.1-billion.

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Wall Street was looking for earnings per share of 55 cents for the second quarter and $2.30 for the full year. Revenue was expected to be $3.36-billion in the second quarter and $13.85-billion for the whole of 2012.

Earlier this year, eBay forecast first-quarter earnings of 50 cents to 51 cents a share and revenue of $3.05-billion to $3.15-billion. For the whole of 2012, eBay previously forecast profit of $2.25 to $2.30 per share and revenue of $13.7-billion to $14-billion.

"They are doing a fantastic job for long-term shareholders," said Bill Smead of Smead Capital Management, which owns eBay stock. "They consistently under-promise and over-deliver."

EBay likely kept its full-year estimates restrained because the outlook for the economy is still uncertain, Mr. Sebastian noted.

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