Amazon.com Soars After Outpacing EBay in Sales, Profit Growth

-- Amazon.com Inc., the world's largest online retailer, topped sales and profit estimates yesterday after its biggest holiday season ever, outpacing EBay Inc. and its e-commerce rivals.

Amazon.com rose as much as 14 percent in late trading after reporting that net income increased 8.7 percent to $225 million, or 52 cents a share. Sales climbed 18 percent to $6.7 billion. That compared with estimates of 38 cents in profit and $6.45 billion in sales from a Bloomberg survey of analysts.

The company used low prices, shipping promotions and product selection to attract shoppers during a recession. At EBay, holiday sales fizzled, with quarterly revenue dropping for the first time in the company's history. Amazon's size and customer service gave it an edge, said Scott Devitt, an analyst at Stifel Nicolaus & Co.

"Amazon is a company that treats its customers better than EBay," he said. The Manassas, Virginia-based analyst recommends buying Amazon.com shares and has a hold rating on EBay. "From a competitive standpoint between the two, I don't think there's any turning back."

Amazon.com, based in Seattle, rose $7 to $57 in late trading after closing at $50 on the Nasdaq Stock Market. The shares had dropped 2.5 percent this month before today. EBay, down 12 percent so far in January, fell 3.7 percent to $12.25 yesterday.

Sales Forecast

Amazon.com outpaced the rest of the e-commerce market over the past two years and that's likely to continue, according to JPMorgan Chase & Co. Even as the U.S. economy lost 2.6 million jobs last year, the company maintained growth.

First-quarter net revenue will rise to between $4.53 billion and $4.93 billion, an increase of as much as 19 percent, the company said. Analysts had estimated sales of $4.55 billion.

Amazon.com will continue to focus on low prices and free shipping to drive revenue, Chief Executive Officer Jeff Bezos said yesterday. Still, those sales will carry lower profit margins. Operating income, a measure of profitability, will decline as much as 37 percent to $125 million this quarter, from a year ago, the company said.

EBay, an online forum that lets sellers auction items or set fixed prices, reported a 6.6 percent sales decline last week. The San Jose, California-based company blamed the global e-commerce slump.

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