EBay Profits Surge 24% In Fourth QuarterEBay Profits Surge 24% In Fourth Quarter

Sales growth in its revitalized online auction site, a focus on mobile users, and growing demand for PayPal helped generate a 10% increase in eBay's fourth-quarter revenue and a 24% surge in profits, excluding Internet communications business Skype, the company reported on Wednesday.

This year, sales could reach between $10.3 billion and $10.6 billion, putting the company on track for its fastest growth in four years, eBay said in a statement.

Excluding Skype, eBay achieved revenue of $2.5 billion for the quarter, yielding profit per share of 52 cents, excluding some costs, according to the San Jose, Calif.-based company. In September 2009, eBay sold 65% of Skype to a group of investors, receiving about $1.9 billion in cash, approximately $125 million in short-term debt, and a 35% stake in the Internet-calling service. Ebay had acquired Skype in $2005 for $3.1 billion, and later wrote down $900 million of that investment.

The company's profit fell, since the year-ago quarter included a large gain from the sale of Skype. When special items such as the Skype gain were excluded, eBay's fourth-quarter profit shot up 24%, with earnings of 52 cents a share vs. 42 cents a share in the prior period a year ago, the company said.

Analysts had expected an average of 47 cents on $2.49 billion.

"We delivered a strong fourth quarter and a solid year, driven by our customer focus, commitment to technology-led innovation and our operating discipline, which is enabling us to reinvest in growth," said eBay president and CEO John Donahoe in a statement. "We are driving strong global growth at PayPal and strengthening our core eBay business. And we are innovating quickly in areas such as mobile, which is helping to position us at the forefront of trends shaping the future of shopping and payments."

The Marketplace -- or online auction site -- has struggled in the past, but eBay has overhauled the site, changing the fee schedule and adding its eBay Bucks loyalty rebate program, for example. In its most recent quarter, the Marketplace unit's net revenue grew 4% to $61 million, for a total of $1.52 billion. The total merchandise volume in this business division rose 6% to $15 billion.

Total payment volume at the PayPal division leaped 26% to $26.87 billion, adding more than $5 billion in payment volume to eBay's overall coffers, the company said.

Currently, PayPal -- which has 94.4 million users worldwide -- adds approximately 1 million new users per month, according to the company. The service is available in 190 markets and 24 currencies around the world, PayPal said. International revenue represented about 51% of PayPal's total revenue and transacted nearly $3,380 in total payment volume every second in the fourth quarter of 2010, the business unit said.

The online auction company also is addressing the needs of the world's increasingly mobile consumer. Ebay plans to leverage its mobile shopping apps, Donahoe told Dow Jones Newswires, predicting the value of the company's mobile transactions would double to about $4 billion this year.