EBay Inc on Wednesday reported that its profit plunged 29 per cent in the latest quarter due to a drop in its online Marketplaces business and the strength of the US dollar.
EBay said its net income for the fiscal quarter ending on June 30 was 327 million dollars, or 25 cents per share of stock, as compared to 460 million dollars, or 35 cents per share, in the same period last year.
Net revenue in the quarter was slightly less than 2.1 billion dollars as compared to nearly 2.2 billion dollars during the same three months in 2008, according to the San Jose, California-based Internet firm.
"We drove solid second-quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business," said eBay chief executive John Donahoe.
"We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I'm pleased with our pace, our progress and our performance."
EBay's performance in the quarter bested expectations on Wall Street, which rewarded the company by driving its stock price up more than four per cent to 20.37 dollars in after-hours trading.
"We've executed well and we've executed aggressively in the second quarter," Donahoe said in a conference call with analysts and reporters.
"We feel really good about where we are mid-year. We are moving in the right direction; a strong company getting stronger."
Internet telephony service Skype and online financial transaction service PayPal, both owned by eBay, reported strong growth in the quarter.
The firm's Marketplaces unit consisting of electronic commerce websites including eBay, Shopping.com, StubHub, and Kijiji logged 1.26 billion dollars in revenue, a 14-per cent drop from the same quarter in the prior year.
EBay attributed the drop to "the stronger dollar and the impact of challenging macroeconomic conditions."
Approximately 57 per cent of Marketplaces revenue comes from markets outside the United States, according to eBay.
EBay has been working to revitalize the website, which pioneered online auctions.
PayPal will announce tomorrow that it is opening its software platform to outside developers in a belief that the move will lead to creative new uses for the online financial transactions service, according to Donahoe.
Third-party developers will be able to work with PayPal software in a move "analogous to the iPhone," which lets outside software makers customize applications for the Apple smart phones, Donahoe said.
"We think it will accelerate the pace and level of innovation at PayPal," Donahoe said of the move.
EBay believes it will double its PayPal business within three years, according to company chief financial officer Bob Swan.
EBay also plans to trim costs in the coming three years by two billion dollars by "driving operational excellence" and to reinvest the savings.
The online market appeared to stabilize early this year and eBay saw "modest improvement" in the second half of June, according to Swan.