EBay Reports Record Revenue

EBay Inc., the shining star of Internet sales, continues to burn brightly, and it has its 34 million users to thank. The online auction house Thursday reported that its second-quarter consolidated net income was $24.6 million, or 9 cents per diluted share. Net revenue was $180.9 million, a quarterly record and an 84% increase over the $98.2 million generated in the same period last year.

Despite raising the curtains June 11 on eBay Stores, a pilot program of fixed-price trading that has attracted 18,000 merchants, including big names such as IBM and J.C. Penny, eBay CEO Meg Whitman downplayed the role large companies will play in overall sales. "We don't know yet how big, how successful, or how meaningful the results will be," she said during a conference call with analysts. She added that while she sees potential in sales by big companies, they're not factored into future revenue forecasts, which were raised from between $15 million and $30 million, to between $385 million and $400 million for the second half of the year. "Your next-door neighbor can compete with large corporations. We like to think of it as enlightened trading," Whitman said.

Ritz Camera Centers Inc. has sold merchandise on eBay since March and plans to open its own storefront within the next month. It sells about 80% of the 1,000 products it lists each month, much higher than the 65% site average, says Andre Brysha, VP and chief marketing officer of Phobo.com, which handles the online sales of RitzCamera.com and BoatersWorld.com.

Brysha says eBay is careful not to alienate individual sellers. "They've gone to retailers like us to supplement categories, because we have the inventory, we have the wherewithal to list a lot of products," he says. "In virtually any kind of planning discussions we have, they always bring up that they're not going to jeopardize the relationship with the community by making such a dominant environment for retailers that it would overshadow the auctioneer."