EBay warns on forecast and economy; shares down
SAN FRANCISCO (Reuters) - Online auction leader EBay Inc (EBAY.O) gave a disappointing forecast and said it was suffering from a consumer spending slowdown that would drag on into 2009, sending its shares down more than 5 percent.
The after-hours sell-off extended the stock's 14 percent drop in the regular session on Wednesday, fueled by investor concerns the company would be hit hard by a global recession as it tries to woo back buyers and sellers.
"There is a high degree of economic uncertainty and turmoil in the business market and this is impacting consumer spending, and we're seeing an impact across all of our platforms," Chief Executive John Donahoe said on a conference call.
EBay cut its full-year revenue forecast to a range of $8.53 billion to $8.68 billion, below its previous estimate of $8.8 billion to $9.05 billion.
It forecast earnings for the fourth-quarter, usually its strongest period due to holiday sales, at 39 cents to 41 cents per share before items. That was well below a Wall Street view of 47 cents per share, according to Reuters Estimates.
"It's really the guidance I think is disappointing," said Jeffrey Lindsay, analyst at Sanford C. Bernstein, referring to the fourth-quarter forecast. "It's probably a very bad signal for 2009."
The results also show eBay is probably losing more ground to company websites and rival Amazon.com (AMZN.O), said Ryan Jacob, a portfolio manager who holds a small position in eBay.
THIRD QUARTER BEATS VIEW
EBay reported a third-quarter net profit of $492 million, or 38 cents per share, from a year-earlier loss of $936 million, or 69 cents per share, when it took a $1.4 billion write-down for its Web telephone service Skype.
Total revenue rose 12 percent to $2.12 billion.
On an adjusted basis, earnings were 46 cents per share, above the average analyst view of 41 cents per share.
EBay also said the total value of all goods sold on its site, a metric known as gross merchandise volume, fell by 1 percent from a year ago -- the first time it has ventured into negative territory.
"One of the biggest surprises here was the GMV growth, which turned negative for the first time ever," said Jefferies analyst Youssef Squali. "That's not good and I would suspect that, combined with the lower guidance, is sending the stock price down after hours."
To counteract slower growth in auctions, which comprise the bulk of its business, eBay has lowered upfront listing fees and issued coupons to lure buyers who have gravitated to competitors like Amazon and Craigslist. The company said last week it would cut 10 percent of its work force.
In the third quarter, revenue grew 4 percent in eBay's main marketplaces business, which includes auctions. Revenue rose 27 percent to $597 million at PayPal and rose 46 percent to $143 million at Web-based call service Skype.
Shares of eBay trade at over 10 times projected 2008 earnings, at a discount to Google Inc (GOOG.O) at nearly 20, Yahoo Inc (YHOO.O) at 32 and Amazon.com Inc (AMZN.O) at 41.
EBay shares fell to $14.50 in extended trade after closing at $15.33 on Nasdaq.
(Additional reporting by Eric Auchard, editing by Richard Chang)
