SAN FRANCISCO (AFX) -- Online marketplace operator EBay is expected to handily exceed second-quarter numbers, according to First Albany analyst Youssef Squali. EBay is expected to earn 35 cents in the second quarter on sales of $502 million. Squali estimates that EBay will beat the consensus earnings estimate by at least 2 cents to meet his own projection of 37 cents. EBay may even do better than that, Squali told his clients in a note Tuesday morning. At the end of the quarter, he estimated that listings jumped 61 percent to 233 million, surpassing his estimate of 203 million. Domestic listings jumped 55 percent to roughly 153 million while international listings jumped 75 percent to 80 million, he noted. The jump in listings should translate into $509 million in sales, topping his estimate, which, at $503 million, is a million more than the consensus expectation. EBay is estimated to earn 75 cents per share in the second half of the year for a full-year total of $1.46. Analysts estimate those earnings will grow 42 percent in 2004. As for sales, EBay is estimated to post $1.09 billion in sales in the second half of this year, for a full year revenue total of $2 billion. Analysts estimate sales to grow by 45 percent to $2.89 billion next year. Shares of EBay fell 1 percent to $103.46. But EBay, which may see a drag on activity when it begins paying the European value-added tax starting Tuesday, has watched shares catapult from $67 to more than $100 since the start of the year. Amazon.com , which also relies on international sales, saw shares fall 1 percent Tuesday to $35.94. The European Union's regulation requires the collection of VAT on digital services, a broad term that could affect the business of many Internet companies that sell a variety of online goods and services -- music, videos, dating, subscriptions to news sites or even e-learning classes. This broad definition of digital service may require Internet companies, which heretofore have been able to sell to overseas customers without the burden of collecting taxes from them, to begin implementing a tax-collection process. For instance, an online school with a British student might be required to collect the VAT. Similarly, InterActiveCorp may have to begin collecting taxes on EU residents who subscribe to the company's Match.com online dating service. Music services offered by the likes of Apple Computer and RealNetworks fall into the digital services category, as well. And Yahoo will likely have to charge taxes on EU residents who subscribe to its Yahoo Platinum service. AOL Time Warner will have to collect taxes on subscribers accessing its CNN video streams. bei UBS
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