Ebay rakes in rising revenues

Online auction site Ebay last night underlined its credentials as one of the few truly profitable businesses to emerge from the dotcom boom when it revealed soaring revenues and said it had sold over £3bn-worth of goods in the first quarter of 2003.

For the first quarter of this year Ebay had net income of £66m, more than double the £30m it made in the same quarter last year.

The news from the Silicon Valley company, a virtual car boot sale offering everything from holiday homes to soft toys, caused the company to raise its earnings and revenue targets for the rest of the year.

The total value of goods sold through the site around the world came to an astonishing £3.37bn, up from £1.97bn a year ago. And the amount that Ebay made from charging users a fee to sell goods through the site rose 118% to £290m.

Revenues were also boosted by last year's acquisition of PayPal, a payment service that allows Ebay users to send money to each other electronically.

"Q1 was a terrific quarter for Ebay, delivering record results across every part of our business," said the chief executive, Meg Whitman. "We are now more confident than ever in Ebay's long term potential across every facet of our business."

EBay now dominates the online auction sector around the world, with 68.8 million registered users, 31.1m of whom actively used the site during the past year.

According to analysts, the only cloud on the horizon is the question of whether the company can maintain its current growth rates.

According to the calculations of some, Ebay will need to persuade a third of all Americans to sign up by 2010 if it is to achieve its growth targets.

They also warn that Ebay's still-soaring share price may be difficult to sustain in the long run. Even against the backdrop of a struggling market, Ebay shares have risen by a third in the year to date, causing some analysts to question whether they are over valued.

"This is very similar to the late 90s when we did crazy things to justify valuations [of internet companies]. I don't think this is any different," George Sutton, an analyst at Craig Hallam Capital Group told the Wall Street Journal.

Ebay shares currently trade at about 70 times the company's new 2003 earnings estimate. In comparison, shares in software giant Microsoft trade at around 26 times estimated earnings.