EBay profits as dot-coms crash

Associated Press

SAN JOSE, Calif. — While executives at nearly every Internet company have pulled their hair out in the past year, eBay Inc. has quietly gone about its business of making money.

EBay CEO Meg Whitman, shown here in front of the company's San Jose, Calif., headquarters. Associated Press

With key partnerships and overseas growth, executives say they believe revenue can soar from $431 million last year to $3 billion by 2005, which would require an average annual growth rate of 50 percent.

Analysts praise just about everything about eBay — the company's conservative investing strategy, its decentralized management structure and above all, its pile of profits.

"Looking at where the company was two years ago, and where they are today, they've exceeded expectations across the board," said Jeetil Patel, an analyst with Deutsche Bank Alex. Brown. "It's probably the best model suited for the Internet today. "

It is especially hard to discount such optimism when you consider that eBay barreled into pop culture in the late 1990s with hardly any advertising.

The effects have been notable. Amy Bruckman, an assistant professor of computing at Georgia Tech, told a recent technology conference at Santa Clara University that eBay "makes us a less wasteful society."

EBay counts 29.4 million registered users, who pay between 30 cents and $3.30 to list an item for sale, plus up to 5 percent of the final sale price and optional extra fees for better placement on the site.

But just about everyone in eBay's bright and sleek headquarters says calling it an "auction site" is very yesterday — they like to think of it as an online Nasdaq for merchandise. They point to eBay's increased fixed-price and buy-it-on-the-spot options.

Analysts also expect eBay to soon begin offering sellers "storefronts" — entire pages to themselves. For a fee, of course.

EBay hopes to reach still more potential buyers by linking its trading platform to other sites and expanding overseas — in many cases by buying competitors that copied the eBay model. There are already 12 eBay sites geared to other countries.

Those operations are not as profitable as the domestic site, but CEO and President Meg Whitman is confident that will change. After all, eBay runs every site from San Jose, on the same proprietary software.

That means all those far-flung international operations — which would amount to a giant fixed cost for most companies — consist almost entirely of small marketing teams.

"I think trading is in the human DNA," Whitman said. "This is a riot how fast this concept has been adopted by cultures around the world."