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eBay, Amazon buoy sector
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January 27, 1999: 11:59 a.m. ET
Internet stocks take off on heels of better-than-expected earnings reports
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NEW YORK (CNNfn) - Internet stocks, led by online auctioneer eBay Inc., headed for higher ground early Wednesday on the heels of two stronger-than-expected quarterly results.
The American Stock Exchange index of Internet stocks jumped to a new high of 775.20 in early trading, up more than 4 percent, before settling back down slightly.
eBay shares rocketed 75-1/8 to 296 on the Nasdaq, more than a 34 percent gain, shortly after the opening bell. The company late Tuesday posted a net profit, before one-time charges, of $2.8 million, or 7 cents a diluted share. Analysts polled by First Call expected eBay (EBAY) to earn 4 cents a share for the quarter.
eBay Chief Executive Meg Whitman said the company intends to stick to its strategy of building market share, but more importantly, to invest in the future.
"We are focused on continuing to enhance the user experience and on bringing new users to eBay and to continue to build the infrastructure to support this growth," she said. "We think the future is very bright for eBay."
Amazon.com 's stock also rose 15-27/32 to 130-15/16 on the Nasdaq, up 14 percent.
The electronic commerce company credited holiday sales for boosting revenue some 283 percent.
The Seattle-based company posted a pro-forma net loss, excluding charges, of $22.2 million, or 14 cents a share. Analysts polled by First Call had expected Amazon (AMZN) to lose 18 cents per share.
Analysts say both companies are well-positioned to maintain its growth going forward, despite the barrage of new players entering the market.
"In the case of eBay and Amazon, I think you really have seen two brands that clearly have differentiated themselves," said BancBoston Robertson Stephens senior e-tail analyst Lauren Cooks Levitan.
As an e-tailing pioneer, she noted Amazon.com in particular has paved the way for future growth of the industry by broadening its range of products online.
"What we've really learned from the experience of the 1998 cyber Christmas is that anything can sell online," Levitan said. "Customers are enthusiastic about missing trips to the mall, about being able to shop from the convenience of their desktop."
She noted, too, that Amazon.com has maintained a high level of customer loyalty, in spite of the competitors attempting to undercut its prices. That suggests that consumers are looking for more than just a good deal.
"We are seeing a lot of gimmicks with respect to pricing strategies," she said. "People are talking about selling things basically at cost, just giving things away. Those gimmicks can hurt the lesser players, but Amazon has been facing price competition since its inception." 
-- from staff and wire reports
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