EBay 4Q profit and revenue fall amid recession
Quarterly earnings fell 31 per cent at eBay Inc., indicating that its Internet auctions are being hurt by the recession just like traditional retail sales.business Updated: Jan 22, 2009 21:48 IST
Quarterly earnings fell 31 per cent at eBay Inc., indicating that its Internet auctions are being hurt by the recession just like traditional retail sales. The results, combined with a forecast below analysts' expectations, sent eBay shares skidding nearly 6 percent.
San Jose, California-based eBay said Wednesday it earned $367 million, or 29 cents per share, in the quarter. That fell from $531 million, or 39 cents per share, in the year-ago quarter. Excluding one-time items in the most recent period, eBay earned 41 cents per share, 2 cents higher than the prediction of analysts polled by Thomson Reuters.
Revenue fell 6 percent to $2.04 billion, missing analysts' expectations for $2.12 billion. The company said the decline stemmed mostly from the recession and the strengthening of the dollar. Deals done in other currencies now translate into fewer dollars. "There's no doubt eBay was impacted by the macroeconomy, and our fourth-quarter results reflect this," Chief Executive John Donahoe said in a conference call with analysts.
Sales from eBay's marketplace segment, which includes eBay, Shopping.com, StubHub and other e-commerce sites, fell 15 per cent to $1.27 billion.
In the company's PayPal unit, which handles online payments for eBay and other sites, revenue climbed almost 11 percent to $623 million.
The company's number of active users, an important measure of how well the company is attracting new buyers and sellers, rose almost 4 per cent to 86.3 million.
Yet eBay's gross merchandise volume, the total amount of money that flows from transactions on the site, excluding those involving vehicles, sank 12 percent to $11.5 billion. This marked the second quarter in a row in which this metric has declined. Until last year it had never happened to eBay at all.
For the full year, eBay earned $1.78 billion, or $1.36 per share. Revenue totaled $8.54 billion.
Looking ahead, eBay expects first-quarter earnings of 21 cents to 23 cents per share, or 32 cents to 34 cents when excluding one-time items. The company forecast revenue of $1.8 billion to $2.05 billion for the period.
Analysts were expecting adjusted earnings of 40 cents per share on $2.1 billion in revenue in the current quarter. "The macroeconomic environment will continue to be extremely challenging in 2009 and we planned conservatively," Donahoe said.
EBay shares fell 76 cents, or 5.7 per cent, in after-hours trading. Before the earnings report they finished regular trading up 73 cents, or 5.8 percent, at $13.28.