Online marketplace eBay Inc exceeded Wall Street profit estimates for its holiday fourth quarter, helped by more items sold and at higher prices, and gave a bullish 2011 outlook.

Its shares rose 1.7 percent in after-hours trade.

EBay is in the last year of a three-year plan to turn around its marketplaces business, which connects online buyers with sellers.

We were waiting for the turn and the turn has happened, said BGC Partners analyst Colin Gillis. You see it in sold items as well as rebounding average selling prices. They're buying more items and they're also paying a bit more as well.

The company, which pioneered the online auction, is hoping to prove to shareholders that improvements to its site and user experience, including a more targeted search engine and daily deals, is encouraging traffic and delivering more consistent sales.

For the full year, eBay expects adjusted earnings of $1.90 to $1.95 on revenue of $10.3 billion to $10.6 billion.

That compares with the $1.85 per share on revenue of $10.19 billion expected by Wall Street.

Net income for the fourth quarter was $559.2 million, or 42 cents per share, compared with $1.36 billion, or $1.02 per share, a year earlier.

On an adjusted basis, eBay earned 52 cents per share, surpassing the 47 cents expected, on average, by analysts, according to Thomson Reuters I/B/E/S.

Revenue rose 5 percent to $2.495 billion, fueled by a 17 percent increase at its main marketplaces unit and a 25 percent rise at online payments unit PayPal. Total revenue was above the $2.488 billion Wall Street had been expecting.

Gross merchandise volume, a closely watched measure of the total value of goods sold, rose 6 percent, excluding vehicles, beating some analysts' expectations.

The company has been aggressively pushing its mobile platform, where consumers can use their smartphones to scan bar codes and compare prices with eBay's, in a bid to reach more users.

For the first quarter, eBay is expecting adjusted earnings of 44 cents to 46 cents per share on revenue between $2.4 billion to $2.5 billion.

Wall Street has been expecting earnings of 45 cents on revenue of $2.42 billion.

Ahead of eBay's earnings report, options traders took a bearish stance, with puts outnumbering calls among options slated to expire within three months.

Shares rose 1.7 percent to $29.60 after the results were reported.

(Reporting by Alexandria Sage; Editing by Steve Orlofsky)

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