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Monday, 8 July, 2002, 14:57 GMT 15:57 UK
Buoyant eBay snaps up bills firm
EBay and PayPal logos
Online auctioneer eBay has announced it is to buy online payment system PayPal for $1.5bn (1bn).

The all-share deal adds another link to eBay's operational chain, taking it nearer to a full transaction service, from listing to payment.

And it develops a relationship which already sees PayPal rely on eBay for 60% of its turnover.

The deal was unveiled on Monday, with results showing eBay made a $54.3m profit between April and June, on sales of $266m.

Both figures were better than the company's prediction, not to mention most analysts' forecasts.

Making money

EBay has built a reputation as one of the few dot.com stocks not only to stay afloat, but to stay in the black.

The April to June earnings - underpinned by a 48% surge in US transactions over last year - were more than 50% up on those recorded a year earlier.

And Monday's figures give the company a straight run of 15 successive quarters of profit.

Meanwhile, the company is expanding into other areas, having this year gone into China and sealed a deal with high-end auctioneers Sotheby's.

Back to exclusivity

The PayPal deal will see eBay phase out its current payment service, run in association with Billpoint.

The rest of PayPal's operations, predominantly with small online retailers, will continue as before, with the exception of its deals with gambling websites.

"Regulatory uncertainty" was the reason eBay gave for ditching this side of the business - although the mainstream business is facing calls in some US states for it to be regulated as a kind of bank.

The deal comes only five months after PayPal was floated on the stock market.

PayPal shares surged more than 10% in early trade on Monday, while eBay shares eased by almost 5%.

See also:

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