Online auction pioneer eBay Inc reported a 40 percent surge in third quarter income, but warned of a reduced profit in the current quarter as it pays for recent acquisitions. Company shares fell 5.7 percent in late trading on Wednesday.
For the fourth quarter, eBay said it now expects earnings of US$0.21 a share -- US$0.01 below the current Wall Street estimate -- on revenue of US$1.25 billion to US$1.29 billion, reflecting the impact of its acquisition of Internet phone provider Skype Technologies SA and the pending US$370 million purchase of an online payment business from Internet services company VeriSign Inc.
In the third-quarter, San Jose-based eBay said it earned US$255 million, or US$0.18 per share, for the three months ended Sept. 30, compared with US$182.3 million, or US$0.13 per share from the year-ago period.
If not for one-time items, eBay said it would have earned US$280.2 million, or US$0.20 per share, matching analysts earnings-per-share expectations, according to Thomson Financial.
Revenue for the period totaled US$1.106 billion, a 37 percent increase from last year's US$805.9 million. Analysts were expecting revenue of US$1.08 billion, according to Thomson.
The Internet bellwether released the results after the stock market closed on Wednesday.
The company's shares rose US$1.59 to close at US$42.01 on the NASDAQ Stock Market, and fell US$2.39, or 5.7 percent, in extended trading.
For the full year, the company said it expects revenues to be between US$4.47 billion to US$4.51 billion, compared to analysts' forecasts of US$4.43 billion.
Ebay, the leading e-commerce player, has been battling skepticism about its acquisition of Skype Technologies. Many analysts have questioned both the price tag -- at least US$2.6 billion -- and the companies' compatibility.
Ebay said on Wednesday that chief financial officer Rajiv Dutta will become Skype's president, after his successor is named. Dutta will remain a member of eBay's executive team, the company said.
In a conference call with anal-ysts, eBay CEO Meg Whitman defended the Skype purchase, saying the merger will help eBay expand its existing services and reach more users.
For one, Skype users will be able to pay their bills automatically via PayPal, eBay's online payment business, Whitman said.
Privately held Skype -- founded by the creators of Kazaa, the file-sharing program that riled the music business -- gives away software that lets people talk for free over the Internet using computers and microphones. A paid version, SkypeOut, allows those calls to be connected to regular phones.
In a phone interview, Dutta refused to elaborate on new services that would come from the merger.
"But certainly, Skype is an opportunity that is truly transformational for eBay, much as PayPal was a few years ago," he said.
Ebay said it had more than 168 million registered users by the end of the third quarter, a jump of 35 percent from last year.
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