eBay 2001 Annual Report Download - page 26

events and with the onset of good weather. We have historically experienced our strongest quarter of
online growth in our Ñrst Ñscal quarter, although our users' shift to more ""practical'' items may cause our
seasonal patterns to look more like a typical retailer. Both ButterÑelds and Kruse have signiÑcant quarter-
to-quarter variations in their results of operations depending on the timing of auctions and the availability
of high quality items from large collections and estates. ButterÑelds typically has its best operating results
in the traditional spring and fall auction seasons and has historically incurred operating losses in the Ñrst
and third quarters. Kruse typically sees a seasonal peak in operations in the third calendar quarter.
Seasonal or cyclical variations in our business may become more pronounced over time and may harm our
results of operations in the future.
Due to the inherent diÇculty in forecasting net revenues, it is also diÇcult to forecast income
statement expense categories as a percentage of net revenues. Quarterly and annual income statement
expense categories as a percentage of net revenues may be signiÑcantly diÅerent from historical or
projected rates. However, we manage our expenses as Ñxed, variable and discretionary costs. Costs that are
largely Ñxed include employee compensation, facility and site operations. Costs that are largely variable
include provisions for doubtful accounts receivable and authorized customer credits, customer support, and
Internet connectivity. Costs that allow signiÑcant discretion as to timing and amount include marketing
and business development promotions, acquisition related costs and business expansion costs. As a general
note, we expect costs to increase in absolute dollars across all income statement categories.
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