EBay Inc. (NASDAQ:EBAY), operator of the world’s largest online marketplace, is expected to post a 10 percent profit increase in the third quarter on strong growth from its PayPal unit through the three months and increasing revenue from eBay in July and August.

The San Jose, Calif., company, which will report results on Wednesday after markets close, is expected to record net income of $826 million, or 50 cents per share, compared to $718 million, or 45 cents per share, a year earlier. Revenue is projected to be $3.9 billion, up 14.7 percent from $3.4 billion last year.

Excluding items, analysts expect earnings per share of 63 cents compared with 55 cents in the third quarter of last year.

The Street's view is in the upper range of the company's own earnings guidance.

Costs are expected to have risen as transaction and loan losses jumped 43.8 percent, iStockAnalyst.com said in a report.

Aside from expenses, eBay's overall performance appears strong. The company's star performer, PayPal, acquired in 2002, constitutes about 45 percent of its total value. The payment-service provider reached a base of 132 million users at the end of the second quarter, adding 9 million in the first half of this year alone. PayPal's strong growth should continue and it is expected to have added several million in the July-September period.

Even though PayPal's year-on-year traffic is lower, in the third quarter it saw a handsome spike compared to earlier this year, according to Alexa. Analysts from the Susquehanna Financial Group project 23 percent growth in PayPal’s total payment volume as the payment-service provider benefited from the strength of its marketplaces. 

EBay is also promoting PayPal's mobile app and expects to generate $200 billion in revenue from mobile commerce in 2013, according to a Trefis research note, up from $175 billion in 2012. 

Unlike PayPal, eBay's traffic is down in the third quarter compared to the second, according to Alexa.

"EBay traffic declined with unique users down 4 percent year-over-year in August (versus down 5 percent year-over-year in July) and total visits were down 7 percent year-over-year (versus down 11 percent year-over-year in July)," a Raymond James report said. 

Fortunately, eBay's sales haven't been hurt. ChannelAdvisor, a New York-based e-commerce-data company, noted an acceleration in eBay’s sales in July and August, especially a modest rise in auction sales that follows a recent decline. While the auction business isn't a major part of eBay’s overall sales and profits, the segment also no longer weighs on the company's results. 

Analysts don't expect eBay to take any charge against earnings for cutting its payroll. In the final quarter of 2012, eBay laid off 600 employees and 300 contractors, which led to a charge of about $26 million. With the restructuring completed, the company isn't expected to announce any significant layoffs in the third quarter. 

The quarterly improvement also indicates that eBay's performance in its domestic market has been strong enough to offset weakness elsewhere.

"Macroeconomic headwinds in Europe and Korea will continue to be a challenge in the second half of the year," John Donahoe, eBay’s chief executive said, when the company released second-quarter results in July. "But our core businesses are strong."