By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – It's Friday so "It's Only Money," a review of the big and not-so-big stories of the week. I'm Maxine Shapiro with KERA Marketplace Midday.
Let's say you're new to the stock market and you want to understand how things work. I have the perfect illustration today that might help. eBay, the online marketplace everyone uses but me, today announced a 69 percent increase in net income for a year ago. That equates to 16 cents a share up from 11 cents a share. Then the company said revenue skyrocketed 84 percent from a year earlier. From about $289 million to today's almost $531 million. Even their forecasts weren't that high.
So why is eBay trading down today? A couple of reasons. First, analysts and investors expect eBay to beat company projections and not just by a little, but by a lot. Microsoft used to do that - lowball themselves so when the results come out, it looked better than expected. And second, eBay's crystal ball predicts for 2004, earnings will only be 98 cents a share, instead of the $1.05 analysts anticipate. I mean, how can eBay continue to grow at the frenzied pace they've been growing at?! And it's already been rewarded for past performance. Last week, its stock price was at the level it was during the tech bubble before the recession. That's why eBay's down today. Hope that helps.
In the "what-to-do-when-you-have-$11-million-hanging-around?" category, you go and buy a bra from Victoria's Secret. 6,000 stones totally - and 2,500 karats. And one of those "stones" is a very rare Excelsior Diamond coming in at 70 karats. Or you might want to take some of that $11 million and put it towards your kid's college tuition. State universities announced this week they'd be raising fees for 2004. If you're planning on sending anyone to the University of Texas at Austin, the overall increase from '03 will be 29 percent higher. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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