Amazon.com, EBay Beat Expectations

Two bellwether Internet retailers handily beat Wall Street expectations Tuesday, and their strong sales reports confirmed that the first online holiday retail season was a success.

With Amazon.com’s sales nearly quadrupling for the quarter and EBay Inc., the rare profitable online retailer, earning seven times more than the same quarter last year, investors boosted both of their stocks in after-hours trading.

Previously, industry analysts had pegged online sales for the holiday season as topping $3 billion, but the figures from Amazon.com and EBay, two of the largest Internet-only retailers, are among the first hard pieces of evidence of those strong sales.

Amazon.com continued to pile up the losses in the fourth quarter, though they were smaller than Wall Street analysts had expected. Sales at the giant bookseller more than tripled as shoppers flocked to the Internet to do their holiday buying.

The Seattle-based company reported that it lost $46.43 million, or 30 cents a share, in the quarter ended Dec. 31, compared with a loss of $10.81 million, or 8 cents a share, in the same period a year ago. The results include a charge of $24.2 million for costs associated with recent acquisitions.

Sales were $252.89 million, up from $66.04 million a year ago.

Excluding the charges, Amazon.com lost $22.18 million, or 14 cents a share, in the fourth quarter. Analysts surveyed by First Call had expected its operating losses to be 18 cents a share.

Amazon.com reported its results after U.S. financial markets closed. Its shares rose $2.71 to close at $115.09 in trading on Nasdaq, while investors sent the stock soaring to as high as $125 in after-hours trading.

EBay reported sharp growth in its fourth-quarter sales and profit and set a 3-for-1 split of its stock.

The company reported a “supplemental” net income, excluding various expenses, of $2.8 million, or 7 cents per diluted share, compared with $214,000, or 1 cent per share, in the year-ago period. Revenue rose to $19.5 million from $2.6 million the year before.

EBay shares, which had closed regular trading up $3.38 to $220.88, surged to as high as $236 in aftermarket activity. The stock has traded as high as $321 since the company went public at $18 a share four months ago.

EBay said the sharply higher results mainly reflected increased activity on its site. During the fourth quarter, it said it hosted 13.6 million auctions of everything from guns to Beanie Babies, up from 9.2 million auctions in the third quarter.

Because the company brings buyers and sellers together but does not actually handle merchandise, its overhead is relatively low.

Still, EBay said its expenses did rise sharply during the quarter because of increased spending on customer support personnel, depreciation of equipment and other transactional expenses such as bank processing charges for customer fees paid by credit cards.

EBay’s expenses for sales and marketing, product development and general and administrative purposes rose to $14.4 million from $2 million in the year-ago quarter.

San Jose-based EBay has benefited from being a pioneer in online auctions, but powerful competitors such as Yahoo Inc. have mimicked the feature and have the marketing strength to draw newcomers.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

* Communications circuit maker Broadcom Corp. reported sharply higher earnings that rose on the back of strong demand for cable television boxes that use its chips.

Broadcom’s earnings report came hand-in-hand with the announcement of a 2-for-1 split of its stock.

Broadcom’s net income for the fourth quarter rose to $12.8 million, or 26 cents per share, from $2.5 million, or 6 cents, a year earlier. Revenue more than quadrupled to $70.1 million from the $17.3 million in the year earlier period.

The stock split will be effective Feb. 17.

* Computer Sciences Corp., the No. 3 provider of computer services, met Wall Street’s consensus fiscal third-quarter expectations as net profit rose nearly 26% versus 1997’s last quarter. El Segundo-based-CSC said net income for the quarter ended in December amounted to $87 million, or 54 cents per share, up from $69.1 million, or 44 cents, reported a year ago. The latest results match analysts’ average projection. Revenue for the quarter rose 15.9%, to $1.9 billion from $1.7 billion in the prior-year’s quarter.

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Amazon Sells More, Loses More

Online retailer Amazon.com’s fourth-quarter sales rose nearly fourfold from a year earlier, but its net loss also ballooned as expenses soared. Quarterly sales and loss per share:

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Sales: In millions

Fourth-quarter 1998:$252.9 million

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Loss Per Share

Fourth-quarter 1998:-30 cents

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Sources: Company reports, Bloomberg News