Investors battered shares of online auctioneer eBay (EBAY) Wednesday after the company reported that its third-quarter profit fell 29 percent and offered a disappointing holiday forecast. EBay's stock was trading more than five percent lower in after-the-close market activity. The company's results show that eBay has made strides in digging out of its recession fueled quagmire, but uncertainties hover around the company, most notably the circus surrounding Skype, which eBay is trying to sell to a consortium of private investors.

UBS internet analyst Brian Pitz called eBay's results "good," noting that revenue came in "above consensus and guidance," in a note to clients. EBay stock has soared 80 percent this year and hit a 52-week high earlier Wednesday.
During a conference call with analysts, company executives argued that eBay is healthy and poised for growth. They said they expected the Skype deal to close "in the next few weeks."

"We're seeing our turn around efforts start to pay off," said John Donohoe, eBay's CEO. "We intend to lead, compete and win."

But unlike some of its technology brethren, eBay didn't find favor with investors, who were spooked by the company's lackluster holiday forecast. EBay said it expects adjusted earnings of 38 cents to 40 cents a share on revenue of $2.2 billion to $2.3 billion, just shy of Wall Street's expectation of 40 cents on revenue of $2.26 billion.

"We're cautiously optimistic about consumer spending going into the holiday," Donohoe said. "The economy we see as stable. But more important, we see some progress on our turn around metrics, across categories."

On a currency-neutral basis, Skype's revenue growth was 36 percent, eBay executives said, adding that they fully intend to see the completion of the planned sale of the Web calling service to a consortium of investors led by Silver Lake Partners and Andreessen Horowitz, the investment firm of Marc Andreessen, the billionaire co-founder of Netscape.

But that sale has been complicated by a barrage of lawsuits which the founders of Skype, Niklas Zennström and Janus Friis, have filed against eBay, the consortium and Michelangelo "Mike" Volpi, the former CEO of the Internet TV service Joost, which the pair also founded.

The Skype founders are trying to regain control of Skype by exercising certain intellectual property rights associated with Skype's technology, leading to a tug of war over the $2 billion company. The litigious duo has accused Volpi of lying, stealing and bad faith, and have asked the court to bar Volpi from using knowledge or confidential information he obtained at Joost to benefit the Skype deal.

EBay said that the consortium is funding the cash for the deal and has "initiated transfer of funds to an escrow account," pending the completion of the deal. We'll see if Zennström and Friis don't seek to have a court prevent that.

Follow Sam Gustin, a reporter for DailyFinance, on Twitter here. Follow DailyFinance's tech coverage here.

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