eBay Inc, the newly floated online trading company which brings buyers and sellers of personal belongings together over the internet, reported a minuscule profit on Tuesday, sending internet stock supporters into another frenzy of excitement as the shares closed up 12% at $82.5. eBay went public in September at an offer price of $18 and the subsequent leap to $80 shows that it takes more than the threat of a global recession to extinguish Tulip fever in the internet sector. In its first ever public earnings release, San Jose-based eBay said third quarter net profits rose to $663,000 from $199,000 this time last year while revenues rose to $12.9m from $1.5m last time. The claimed number of registered users of the eBay web site has climbed by 400,000 since the end of June, making it a current total of 1.2 million. Based on Tuesday’s market capitalization of the company, each registration is now worth around $2,700. eBay’s chief financial officer, Gary Bengier, is keenly aware of the heightened expectations that ride alongside a $3bn market capitalization, and like many of his compatriots in this sector, he warned investors not to look for short terms profitability goals. He also reminded shareholders that the competitive landscape is evolving very fast, with rival sites becoming bigger and more numerous. Chief executive Meg Whitman said eBay would counter the competitive threat by retaining the loyalty of its highly active user base through investments in infrastructure and customer support. Over the next quarter, eBay said increased marketing expenditure would erode profits as it stepped up advertising budgets. Up until now, said Meg Whitman, new users came to the eBay web site almost exclusively through word of mouth. While she hoped this form of recommendation would continue, Whitman said the company was working hard on ways of getting its marketing message out to a broader audience.
