Oct. 17 (Bloomberg) -- EBay Inc., the world's largest Internet auctioneer, reported sales and profit that exceeded analysts' estimates, excluding a writedown for its Skype telephone unit, and raised its earnings and revenue forecasts for the year.

The online retailer said third-quarter sales climbed 30 percent to $1.89 billion on revenue from Europe and the PayPal payment service. When the $1.39 billion writedown for Skype is included, EBay posted its first loss since going public in 1998.

Chief Executive Officer Meg Whitman's decision to seek growth outside both the U.S. and its traditional auction operations has countered slowing domestic demand and led the shares to increase 35 percent this year.

``They look strong, with a little bit faster clip of growth in the auction arena, particularly in the EU,'' said Patti Freeman Evans, an analyst at Jupiter Research in New York.

EBay's loss of $935.6 million, or 69 cents a share, compared with net income of $280.9 million, or 20 cents, a year earlier, the San Jose, California-based retailer said in a statement.

The Internet company said earlier this month that results at Skype, which it bought for $2.6 billion in 2005, didn't meet its expectations.

International revenue jumped 40 percent, almost double the 22 percent gain in the U.S. Revenue from PayPal surged 35 percent, faster than the 26 percent increase from auction and fixed-price sales.

Profit Forecast

EBay increased its full-year profit forecast to as much as $1.49 a share on revenue of at most $7.65 billion. Analysts surveyed by Bloomberg had estimated average profit of $1.38 on revenue of $7.46 billion.

EBay rose 11 cents to $40.71 at 6:49 p.m. in extended U.S. trading after the results were released. Earlier, the shares climbed $2, or 5.2 percent, to $40.60, on the Nasdaq Stock Market.

The retailer earned 41 cents a share, excluding the Skype- related costs, helped by a 4 cent tax benefit. Twenty-one analysts surveyed by Bloomberg estimated average profit of 33 cents on revenue of $1.83 billion.

EBay said earlier this month it would write down the value of the unit by about $900 million and take an additional charge to pay former shareholders under a provision of the takeover agreement.

Skype Costs

Some analysts had criticized the company for paying too much for the then-unprofitable Luxembourg-based startup, which allows people to make calls over the Internet.

``EBay may have been last to the party to realize Skype didn't live up to the billing,'' said Mark Mahaney, an analyst at Citigroup Inc. He rates the shares ``buy.''

With revenue growth probably slowing for the fourth straight year, EBay acquired ticket reseller StubHub and Web recommendation site StumbleUpon to attract more customers.

Whitman, 51, also reduced listings and simplified searches so customers might find the concert tickets and vintage harmonicas they sought.

``We feel good about our strategies headed into the fourth quarter, and the investments we are making,'' Whitman told analysts on a conference call.

The company introduced EBay Neighborhoods earlier this month, allowing users to share information and photos. MySpace, the social-networking Web site owned by News Corp., said today that it will add Skype's free Internet-calling technology to its instant-messaging service.

Social Network

``It's going to take some time before we see whether or not EBay can leverage this social network-ecommerce concept to see if they can turn it into profit,'' said Tim Boyd, an analyst at American Technology Research in Greenwich, Connecticut.

EBay forecast fourth-quarter earnings of 39 cents to 41 cents a share, excluding some items, compared with the average analyst estimate of 38 cents. Sales will be as much as $2.15 billion, EBay said, while analysts expect $2.05 billion.

The value of items sold on EBay increased 14 percent to $14.4 billion, accelerating from growth of 12 percent in the second quarter.

``That's one sign of health in the marketplaces business,'' Chief Financial Officer Bob Swan said today in an interview.

Revenue at PayPal, acquired by EBay in 2002, climbed to $470 million, spurred by the addition of businesses using the service. Several airlines including US Airways Group Inc. and Southwest Airlines Co. joined in the past four months, Swan said.

Skype, profitable for a third straight quarter excluding the charge, increased revenue 96 percent to $98 million. It expanded the number of registered users 81 percent to 246 million.

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina at 1348 or cburritt@bloomberg.net

Last Updated: October 17, 2007 19:06 EDT