EBay results top estimates but outlook is cautious

SAN FRANCISCO Wed Jan 18, 2012 5:51pm EST

Visitors chat next to the Ebay logo at the CeBIT computer fair in Hanover March 2, 2011.     REUTERS/Tobias Schwarz

Visitors chat next to the Ebay logo at the CeBIT computer fair in Hanover March 2, 2011.

Credit: Reuters/Tobias Schwarz

SAN FRANCISCO (Reuters) - EBay Inc reported a higher-than-expected quarterly profit on solid growth in its online marketplaces and an increase in transactions processed through its PayPal electronic payments business.

The e-commerce company's shares were up nearly 2 percent in after-hours trading, even though eBay gave a cautious outlook for first-quarter profit and revenue.

The company reported fourth-quarter net income of $2 billion, or $1.51 a share, compared with $559 million, or 42 cents a share, a year earlier. Revenue rose 35 percent to $3.38 billion.

EBay recognized a big gain from the sale of its remaining stake in Skype during the fourth quarter. Excluding that and other items such as stock-based compensation expenses, profit was $788.6 million, or 60 cents a share, the company said.

Analysts, on average, expected eBay to earn 57 cents a share on revenue of $3.32 billion, according to Thomson Reuters I/B/E/S.

EBay is riding an e-commerce growth wave as shoppers buy more items online and through smart phones and tablet computers.

The company benefits from this trend because its online marketplaces charge fees on transactions and other activity. The company's PayPal unit takes a small cut of a rising volume of electronic payments processed on its network.


EBay forecast first-quarter profit of 50 cents or 51 cents a share and revenue of $3.05 billion to $3.15 billion. Profit for 2012 will be $2.25 to $2.30 a share and revenue will be $13.7 billion to $14 billion, the company added.

Analysts were expecting first-quarter earnings of 54 cents a share and revenue of $3.16 billion. For the full year 2012, analysts estimated earnings of $2.31 per share on revenue of $13.66 billion, according to Thomson Reuters I/B/E/S.

EBay generates about 30 percent to 40 percent of its revenue in Europe, where many economies have been dented by the debt crisis.

The recent decline of the euro against the U.S. dollar reduces the value of sales in euro zone countries when they are converted to dollars by California-based eBay. Currency volatility also restrains cross-border transactions, a profitable source of growth for PayPal.

"They're exemplifying the bearish outlook for the currency by telling people how much the weak euro will affect their earnings in the next quarter. They want to under-promise and over-deliver," said Bill Smead of Smead Capital Management, which owns eBay shares.

"But earnings are going to grow 15 to 20 percent a year for years and all these little wiggles in the short run are just noise," he said.

EBay described the performance of its business in Europe as "stable," while its performance in Asia improved.

(Reporting By Alistair Barr; Editing by Andre Grenon, Bernard Orr and Steve Orlofsky)

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Comments (2)
WilliamBilly wrote:
Ebay is trash and people sell garbage.. I`ve been ripped off so many times on Ebay and the customer support actually allows fraud and abuse against customers without regard.

I`m NEVER going back to Ebay and the only reason their sales jumped is because many and new Chinese sellers have been selling their garbage from overseas. In the last 10 transactions on Ebay, 5 have been defrauded and I have lost money. Ebay customer service NEVER cared about their customers.

Jan 18, 2012 5:08pm EST  --  Report as abuse
Paulson003 wrote:
As far as making/saving $ and eBay goes, forget the stock and use the website.

If you send the seller a question about an item, find another of their listings, and send the question from that item page, rather than from the one that you actually want. This will add a little bit of work for the seller, if they want to add the question/answer to the item description page that you are actually interested in.

If you see an item that you want listed in auction format, send the seller a message asking if they will accept $x to end the auction early and sell the item to you. May be telling them that they would not have to wait as long to get their money (they would probably know that, but it still might help). If that does not work, use a sniping service such as Bidball.com to bid for you. It’ll bid in the last few seconds, helping you to save money and avoid shill bidding.

Use a site like Ebuyersedge.com to set up saved searches. You’d get an e-mail whenever a match is listed. Especially good for “Buy It Now”s priced right.

If the item that you are looking for is difficult to spell, try a misspelling search site like Typojoe.com to hopefully find some deals with items that have main keywords misspelled in the title. Other interested buyers might never see them. Then, if the item is listed an auction format, after a few days of no bids (hopefully anyway) send the seller and offer to end the auction early and sell the item to you. They may worry that no one is interested, and take whatever they can get.

Jan 18, 2012 7:09pm EST  --  Report as abuse
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