Amazon (NASDAQ: AMZN), simply put, had a quarter to die for, the kind that all shareholders have on their wish lists. The Q3 numbers, which were released on Thursday after the bell, speak for themselves. Net sales: up 28%. Operating income: up 62%. Per-share profit: up 67% to 45 cents. Free cash flow for the trailing twelve months: up 98%. Yep, Amazon's fundamentals seem to be heading in the right direction.

According to our earnings preview, Wall Street was on record as wanting to see 33 cents per share on the bottom line. Amazon's management did a fine job of supplying further evidence to the market that the company's online business model is not only here to stay, but that it should provide shareholders with a significant amount of value over time.

Online auction giant eBay (NASDAQ: EBAY), a business that counts Amazon (NASDAQ: AMZN) and Yahoo! (NASDAQ: YHOO) as related companies, was not popular in Wednesday's after-hours session. The third-quarter report just didn't do it for Wall Street, so Wall Street decided to make some trouble and bring the per-share price of the stock down by 4.5%. Oh sure, the company beat earnings by the most famous amount there is -- the proverbial penny -- but, according to this Bloomberg piece, guidance was not so inspiring.

The top line was actually pretty cool. Net sales saw an increase of 6%. Unfortunately, the bottom line couldn't take advantage of such growth. On an adjusted basis, net income dropped 16% to 38 cents per diluted share. And, as I just said, that was one penny ahead of the analysts.

Shares of GSI Commerce (NASDAQ: GSIC), an e-commerce and online marketing services company, fell by over a dollar a share on news of a stock offering priced at $17 per share.

The proposed underwriting of 3.7 million new shares will help the company raise $59 million. Existing shareholders, including Softbank Capital Partners, plan to sell and additional 8.2 million shares for proceeds of $139 million.

GSI Commerce was among the most active small-cap stocks in Thursday's trading. At mid-day, the stock was down 6% on heavy volume of over four million shares, well ahead of the average daily volume of 350,000 shares.

Shares of online retailer Amazon.com, Inc. (NASDAQ: AMZN) are trading a bit higher this afternoon after being upgraded today by Susquehanna Financial.

Susquehanna Financial analyst Marianne Wolk raised her rating on the stock this morning to a "positive" from a "neutral" rating and put a $100 price target on the company. The stock is currently trading up 1.7% on the day to $76.91, up $1.28.

Retail spending at the "bricks-and-mortar" level has not been growing really fast for several years. E-commerce, often an easier way to shop and compare prices, has had double-digit growth since Amazon (NASDAQ: AMZN) became a retail force and big store chains like Wal-Mart (NYSE: WMT) moved online.

Everyone knows that e-commerce growth faltered in November and early December. There was hope that a last minute rush from people who wanted this holiday to be a "last hurrah" would save e-commerce spending from being a total bust. Things have not turned out that way, which says a great deal about how bad this holiday season really is, at least on the retail side of things.

According to comScore, online sales were only up 1% from early December through December 19, hitting $12.849 billion. Sales on "Cyber-Monday" were hardly impressive at $846 million. Two sales days this year have topped that. The categories which have really be slaughtered are music, movies, and video and jewelry and watches. The first category does not make much sense, since songs and movies are not terribly expensive. Perhaps they tend to be bought by younger people who may be more financially pinched than their parents.

Amazon (NASDAQ: AMZN), which competes with the e-commerce segments of companies such as Yahoo! (NASDAQ: YHOO), eBay (NASDAQ: EBAY), Time Warner's (NYSE: TWX) AOL, and Apple (NASDAQ: AAPL), closed on Wednesday at $49.99. After hours, it plunged to $42.98, a drop of 14%, following its earnings report. Actually, I didn't think the numbers were that bad. Sales increased 31%, and earnings per share came in at 27 cents per share on a diluted basis. That performance represented a growth rate of 42%, and it was 2 cents ahead of Wall Street expectations.

As you can imagine, though, it's the fear of what lies ahead that's put pressure on Amazon's stock. Management has stated it intends to carefully assess its investment priorities. The economy is getting worse, and all retailers, online or brick-and-mortar, from Wal-Mart (NYSE: WMT) to Target (NYSE: TGT), are going to feel the sting of the careful-spending consumer.

Amazon is going to continue doing what it does best: namely, keep its corporate head to the ground and process those holiday orders. But I have to wonder if there is an opportunity here. If the economy is headed for further disaster, perhaps precipitated by the negative wealth effect (i.e., people becoming less inclined to spend due to their shrinking net worths), then Amazon might be able to persuade them that online shopping at its website is the way to go. Not only will it save on fuel costs, but the company offers free shipping on orders that meet a certain price threshold. That might beat a trip to the mall.

eBay, Inc. (NASDAQ: EBAY), which competes with Amazon.com, Inc. (NASDAQ: AMZN), Yahoo!, Inc. (NASDAQ: YHOO), and Google, Inc. (NASDAQ: GOOG), reported earnings for the third quarter on Wednesday. Net revenue increased 12% to $2.1 billion. Earnings on an adjusted basis were $0.46 per diluted share versus $0.41 per diluted share in the similar quarter one year ago. That was good for an 11% growth rate.

As I pointed out in my earnings preview, the call was for $0.41 per share. So eBay easily beat Wall Street's analytical wizards. But, in this market, it's all about the forward guidance. It just doesn't matter anymore, the economy is tanking, and traders are selling things off left and right. According to this source, management has lowered the full-year outlook for earnings to a range between $1.69 and $1.71 per share as opposed to a previous expectation of achieving earnings between $1.72 and $1.77. This is bad news, of course, but eBay did manage to increase its operational cash flow. Net cash from operations went up by 10%, coming in at $693 million. So there's that, at least.

It isn't enough, though. eBay looks like it's going to have a rough time along with the economy. Its stock may be cheap, and management may be repurchasing shares (eBay took back 25 million shares during the Q3), but it isn't a buy unless you're a very long-term investor. eBay closed down over 13% during regular trading hours on Wednesday, and was down another 3.5% during the after-hours session. I can't see why the stock won't be heading lower. Again, if you've always wanted to be in eBay, this is probably a decent enough price on a valuation basis for those with a long-term horizon, but I would imagine that any guidance is at risk now considering recent economic data. That means even better valuations may be ahead.

Disclosure: I don't own any company mentioned; positions can change at any time.

According to a report from the 451 Group, the third quarter was horrible for tech M&A. With the financial crisis, it's tough to get buyers interested in deals.

But, today we got some relief; that is, eBay (NASDAQ: EBAY) agreed to shell out $820 million in cash for Bill Me Later. In fact, the company also paid $390 million for bilbasen.dk, which is a leading classifieds operator in Denmark.

At the same time, eBay plans to slash 10% of the workforce (amounting to about 1,000 employees). With an impending global recession, the environment is likely to be pretty bad for consumer platforms.

Thus, with the Bill Me Later transaction, there may be some traction -- especially with the PayPal business. But again, eBay will need to demonstrate skill with integration (which can be particularly tough in the tech world). Besides, eBay's M&A track record has been spotty, specially since its Skype deal.

Bill Me Later will certainly be costly. While the company is growing quickly, its revenue is only $150 million. Besides, the deal will dilute eBay's 2009 earnings by 6 cents to 13 cents per share. Also, might the credit crunch result in some problems for Bill Me Later?

More importantly, eBay announced that revenue will be at the low end of its forecast for Q3. In other words, the company realizes it needs to make some big moves to keep up the momentum.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Serving 25,000 members worldwide in more than 210 countries, Mastercard Inc. (NYSE: MA) is the second largest payment system, behind Visa (NYSE: V), issuing credit and debit brand cards which provide access to its transactions network. For a fee, of course.

And revenue from those fees and other charges is advancing at a solid pace. In general, analysts expect F2008 revenue to increase a solid 20-25%. Further, while U.S. gross dollar volume increases will slow with the slow-growth U.S. economy in 2008, international GDV growth should remain robust.

In addition, Mastercard has multiple opportunities to increase market share, both domestically and internationally, as acceptance of credit card use for non-traditional purchases grows. Analysts are also impressed by debit card and prepaid card program progress. The Reuters F2008/F2009 EPS consensus estimates for MA are $8.647/$10.86.

The risks? Mastercard remains vulnerable to a protracted U.S. economic slowdown, and analysts also are also keeping an eye on the rise of new competitors into the transaction space, primarily PayPal.

The First Call mean rating for MA is: Buy. [21 firms.] Mean 2008 target: $333. [high: $390, low: $245.]

Stock Analysis: Mastercard is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from MA's shares. Note: More-cautious investors may wish to wait until MA pulls-back to $270-280, but keep in mind Mastercard may not retreat to that level. Sell / Stop Loss if you were to purchase shares in this company: $215.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Ebay Inc. (NASDAQ: EBAY): Revenue and EPS beat consensus, but outlook only in-line despite strong quarter. Core marketplace business showed good strength in listings, revenue, and GMV, but active users grew only 1% year over year. eBay needs to get this metric moving in the right direction soon, or the turnaround will not be sustainable. Business in UK and US hurt by weak economy. PayPal and Skype ahead of expectations. Outlook for Q2 revenue and EPS only in-line with consensus, which may worry investors. Full-year guidance slightly above consensus despite significant upside this quarter.

Key Metrics:

* Revenue: $2.19 billion, up 24%, well ahead of consensus and guidance of +16%).
* Adjusted EPS: $0.42, vs. $0.38 consensus. Revenue strong, sales and marketing lower than expected.
* eBay Marketplace Revenue: $1.48 billion, up 19%
* Gross Merchandise Value (GMV): $16.04 billion, up 12% (vs. 11% est)
* Active Users: 84mm, up 1%. THIS IS A DISAPPOINTMENT.
* Total listings: Approximately 647 million, up 10%
* PayPal: $582 million, up 32%
* Skype: $126 million, up from $113mm in Q4
* Outlook:
o June: Guidance in line with current consensus despite strong quarter.
o 2008: Guidance slightly ahead of current consensus: $8.7-$9.0 billion revenue vs. $8.79 consensus, $1.70-$1.75 EPS guidance vs. $1.68 consensus. This will likely spook some analysts.

eBay (NASDAQ: EBAY) announced this morning that its PayPal unit is buying Fraud Sciences Ltd. for $169 million. Fraud Sciences is a company based out of Tel Aviv, Israel, and the deal is expected to be finalized within the next 30 days.

While eBay has not made any comments on how the acquisition would impact its 2008 numbers, it should help to reduce some concerns over eBay fraud, and possibly increase the number of transactions for the struggling company. The tools and analytics that Fraud Sciences will bring are expected to help enhance fraud management on both eBay and PayPal.

Users have had two main complaints about eBay recently: high fees and high fraud risk. The company said last week that it would be announcing a new fee schedule shortly to address the first concern. With today's news, the online auctioneer is addressing the second main concern.

As Meg Whitman's tenure as CEO is coming to a close, new CEO John Donahoe is definitely not wasting any time trying to bring the old eBay back to life. Just how successful Donahoe will be at restoring confidence in its long time customer base remains to be seen, but for sure he has taken two big steps in the right direction.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer

Dell (NASDAQ: DELL) wants to sell PCs at retail outlets, but it does not want to take away some of the customers who buy its products on the internet. And the company can't have it both ways.

According to The Wall Street Journal, "As Dell broadens from just selling its wares directly over the internet and by phone, it risks siphoning off its web customers, who represent the majority of its consumer sales."

Taking such a gradual approach may hurt the company. Most of Dell's competitors, including HP (NYSE: HPQ) and Lenovo, offer a very broad set of products through most consumer electronics retailers. Even Apple (NASDAQ: AAPL) now sells though some large stores.

Since Dell is losing market share to most of the other large PC manufacturers, its philosophy of holding back some of its product line is puzzling. HP is now the leading vendor of computers in the U.S., and recent research shows that Apple is picking up substantial market share.

Trying to decide which products will be offered to consumers at retail and which will be seen only on Dell's website seems to be a complex formula that may only result in lower sales.

The consumer wants what he wants when he wants it. Making it harder for him to buy is a bad idea.

Douglas A. McIntyre is an editor at 247wallst.com.

On so-called "Cyber Monday," another record was broached, as U.S. online shoppers clicked-up $733 million in sales. Some of the top performers included Wal-Mart (NASDAQ: WMT), Dell (NASDAQ: DELL), Target (NYSE: TGT), and Amazon.com (NASDAQ: AMZN).

These are the big players. But I'm sure there could have been even more sales, had smaller online venues been able to keep up in terms of technology and customer service. In other words, e-commerce sites can still be complex -- enough to foil would-be buyers, and resulting in abandoned virtual shopping carts.

How can you improve your online store?

Attention holiday shoppers: online merchants are planning to make it really worth your while to buy stuff from their websites this holiday season. That may not be such great news for investors, though.

As the Wall Street Journal notes, the offers will include free shipping, online-only discounts and gift wrapping, a skill I have never mastered. The news isn't that these offers are available, but that more of them are coming. Even with the worries about overall holiday spending, online holiday spending is expected to rise 21% this year to $33 billion, the paper said, citing data from Forrester Research.

Though this is great news for consumers, it underscores how worried retailers are about the holiday season, which most pundits expect to be lackluster overall. High gas prices also may keep consumers away from shopping malls.

That's good news for the likes of Amazon.com (NASDAQ: AMZN), which is offering Black Friday deals for the first time, and eBay (NASDAQ: EBAY), which is offering free shipping on some goods. Bricks-and-mortar merchants are already getting the message.

Wal-Mart (NYSE: WMT), which had been in Wall Street's dog house for quite a while, is well-aware of these trends. The world's largest retailer surprised Wall Street when it said that its decision to start discounting two weeks earlier than usual paid off. The company's quarterly profit rose more than analysts' forecasts, and it boosted its full-year outlook. Though shares have jumped the most in five years, they are still down for the year.

Further crimping the profits of online merchants is the rising popularity of comparison shopping sites such as Shopzilla. For instance, I found prices for the Nintendo Wii console ranging from $329 to $650, so it pays to comparison shop. That's great for consumers but bad for merchants because it ratchets up price competition.

Any savvy eBay (NASDAQ: EBAY) seller will tell you that oftentimes items sell better together. For instance, a set of 1959 Topps baseball cards would likely fetch more than the individual cards.

But other times, especially in the case of items that aren't really related, you'll get more listing them separately. For instance, The Backstreet Boys new CD probably wouldn't sell well packaged with Kurt Cobain's Journals.

Given the wide variety of business that eBay now has under its umbrella -- Skype, PayPal. StubHub, and others -- some are suggesting that it might be time for eBay to split itself up, or at least divest a few non-core assets. According to The Wall Street Journal [subscription]:

So why aren't investors giving eBay proper credit? Ms. Whitman's big $3.1 billion purchase of Skype and subsequent need to write-down that business's value left a lingering impression that she is an empire builder. One way to show that isn't the case would be to push some of eBay's businesses out of the tent.

PayPal might find independence handy. Rivals Amazon or Google might reconsider their aversion to using Paypal's services if it wasn't run by a competitor. Spinning it off or selling a stake in a public offering also might reduce the conglomerate discount attached to eBay. Selling may not be as fun as shopping, but it usually is more lucrative.

But The Journal already summed up the problem: All the indications would seem to be that Meg Whitman is an empire-builder, making any strategic changes unlikely without outside pressure.