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Online auctioneer Bidz.com on Thursday announced a sharp increase in 2007 annual and fourth-quarter sales, but the Culver City-based company also said its costs to gain new customers had

soared. Bidz said it earned $20.9 million in net income in 2007, compared with $5.5 million a year earlier. Sales rose by 42% to $187.1 million. For the fourth quarter, the company earned

$8.2 million, up from $953,000 in the same period a year earlier. Sales climbed 68% to $63.2 million. Bidz shares rose 61 cents to close at $10.79 before the earnings release. Chairman and

Chief Executive David Zinberg attributed the strong results to “both the strength and widespread appeal of our business model.” Bidz sponsors online auctions of mostly inexpensive jewelry;

unlike auction sites such as Ebay.com, which brings together independent sellers and buyers, Bidz is the seller of virtually all the merchandise on its site. Bidz said it had acquired nearly

110,000 customers in the fourth quarter, compared with 70,400 in the year-earlier period. But its average acquisition cost per new buyer also soared 42% to $51, an indication that it is

having to spend more money on marketing to attract new customers. In an interview earlier this month, Zinberg said the company’s roll of 360,000 “unique” buyers was slightly below the level

of a year earlier, an indication that it may have to continue marketing heavily to replace customers who cease doing business with Bidz. Bidz was the subject of an article in The Times on

Feb. 19 that described unusual bidding patterns on the website, widespread criticism of its customer service and its relationship with its leading jewelry supplier, a Los Angeles dealer who

served time in prison for receiving stolen property. In a conference call Thursday with securities analysts, Zinberg said that customer service was a “critical area for this company” and

that it was improving staffing and training for personnel. -- [email protected] MORE TO READ