EBay's Focus on Mobile Apps Helps Lift Revenue 15% SAN FRANCISCO - Quarter by quarter, eBay defies the conventional wisdom that troubled Internet companies can never return to their former glory. The once troubled online retailer has continued a successful turnaround and cultivated double-digit growth in PayPal, its online payments system. Just three years ago, eBay's core auction business had stalled and its stock price was down to $10, a far cry from its peak of $58 in 2004. At today's closing price of $48.20, the company's stock is up 54 percent for the year, more than the 37 percent gain of its rival Amazon. "That's a significant run," said Colin Gillis, an analyst with the brokerage firm BCG Partners. The core story behind eBay is that they are doing all the right things. Results were strong again in the third quarter. On Wednesday, eBay reported that net income rose $597 million or 45 cents a share, a 22 percent jump from the quarter a year earlier. Revenue climbed 15 percent to $3.4 billion. John J. Donahoe, eBay's chief executive, attributed the company's performance in part to an early bet that mobile phones would become a platform for commerce, with PayPal providing a lead in mobile payments. "We're the largest mobile commerce and payments provider in the world," Mr. Donahoe said in an interview on Wednesday. And we are continuing to innovate. We have a series of innovative apps that people are using. People love shopping on their smartphones and iPad, and PayPal is still the safest way to pay on a mobile phone. EBay's mobile apps have been downloaded more than 100 million times worldwide. EBay sellers are now posting two million items a week from their smartphones and, last quarter, over 800,000 new users made their first eBay purchase from a smartphone. Marketplaces, eBay's biggest business, brought in $1.8 billion in revenue last quarter, up 9 percent from a year ago. PayPal - which eBay acquired for $1.5 billion 10 years ago - brought in $1.37 billion in revenue last quarter, a 23 percent jump from the same quarter a year ago, and it is expected to surpass Marketplaces in revenue. "If you do the math, that will be three to five years out if current trends continue," Mr. Donahoe said. The company, based in San Jose, Calif., expects each business to achieve $10 billion in volume in 2012, more than double the volume in 2011. The operating profit margin increased to 19.6 percent from 18.1 percent in the same period last year. EBay is now experimenting with a new mobile app called eBay Now. The app, which is being tested by consumers in San Francisco, allows eBay customers to buy products - from their phones - from Macy's, Target and Walgreens, and have them delivered the same day. "What our research says is that consumers like choice," Mr. Donahoe said. People may want an item to come to their office that day, their house the following day and get other items in a couple days. We're giving them that choice. If its experiment is successful, eBay Now could mount a challenge to Amazon's shipping service, Amazon Prime, a program that offers customers unlimited free two-day shipping on millions of items for $79 a year. Increasingly, fast delivery is shaping up as the new battleground for online merchants. But strong performance also breeds high expectations. Last quarter, analysts scrambled to raise their estimates after the company reported a 144 percent jump in profit from a year earlier. The third quarter's 15 percent revenue increase, while impressive, was just below the $3.41 billion that Wall Street analysts had expected. The company's stock dipped slightly in after-hours trading after eBay guided analysts to trim their estimates for the fourth quarter. EBay said it expects to earn 66 cents to 69 cents a share during the holiday season; the consensus of analysts had been 68 cents. Asked whether the company would have a hard time meeting analysts expectations in quarters to come, Mr. Donahoe said: "Our momentum continues, even in the face of reasonable economic uncertainty."