Online auctioneer eBay missed Wall Street's earnings expectations for the first time in at least three years to send its shares down nearly 12 per cent and take other Internet stocks lower.
EBay said key holiday sales got off to a slow start in its core US and German markets, and the weak dollar unexpectedly hurt results - although the company beat its own projections.
Investor disappointment was compounded by eBay's well-established record of blowing past estimates. eBay's fourth-quarter net profit rose 44 per cent to $205.4 million from $142.5 million a year earlier.
Analysts are concerned that the online auction market is reaching saturation at a time when advertising and marketing costs are rising.
The company said it decided to increase 2005 investments in key areas, particularly China and PayPal, from $200 million to $300 million - and it would sacrifice some short-term earnings growth with an eye on long-term expansion.