EBay Beats Profit Forecasts; Shares Fall on Outlook
EBay reported earnings and sales that beat analysts' forecasts, but the company's shares fell after it gave first-quarter and full-year guidance that was below market expectations.
The online auctioneer said it earned 45 cents a share and garnered revenue of $2.18 billion in the fourth quarter.
Analysts saw eBay reporting a profit of 41 cents a share on sales of $2.141 billion, according to a consensus estimate from Thomson Financial.
EBay earned 31 cents a share on a topline of $1.72 billion in the comparable period last year.
For the current quarter ending in March, eBay said it expected revenue of $2.00 billion to $2.05 billion -- well below Wall Street's average prediction of $2.14 billion, according to Reuters Estimates. First-quarter analyst forecasts had varied between $2.10 billion and $2.21 billion.
The San Jose, Calif.-based company said it expected 2008 revenue of $8.50 billion to $8.75 billion, which at its midpoint represents growth of 12 percent -- far below the $9.02 billion or 18 percent growth analysts had expected on average.
The company said full-year 2008 net earnings, excluding one-time items and option expenses, are expected to range from $1.63 to $1.67 per diluted share -- at or below the Wall Street average forecast of $1.67, according to Reuters Estimates.
Net profit was expected to range from $1.27 to $1.31 per diluted share. Analysts were looking for an average net profit of $1.37 per share.
Shares of eBay dropped more than 8 percent in extended trading after closing 6.67 percent higher at $28.94 Wednesday.
"The fourth quarter numbers were fine, but the guidance is pretty weak and obviously below the mean,'' said Martin Pyykkonen, an analyst with Global Crown Capital.
"(It's) hard to tell immediately how much of it is fundamental issues or (management) conservatism and how much of it is macroeconomics and related to retail spending.''
Fourth-quarter growth was led by eBay's non-auction businesses, including its retail-like "fixed price'' shopping sites; PayPal, which had revenue growth of 35 percent; online ticketing site StubHub; Web-based phone company Skype; and classified ads and other advertising.
"We're very pleased with the results for the quarter which were strengthened by a solid holiday shopping season,'' CEO Met Whitman said in a statement.
Cash, cash equivalents and investments leaped to $5.04 billion at the end of 2007 from $3.5 billion at the end of 2006, eBay said.
"We closed the year with a very strong balance sheet, giving us the financial flexibility to invest across all of our business units in order to extend our leadership positions,'' eBay Chief Financial Officer Bob Swan said in the report.
On Tuesday, CNBC reported that Meg Whitman, one of the most powerful women in business, is will retire from the company on March 31.
Whitman will be replaced by John Donahoe, who is currently in charge of the company's main auction business. (See interview with Whitman and Donahoe discussing succession plans at left.)
Whitman's departure comes at a time when eBay is trying to recapture the runaway growth that made it into a household name.
Cutting Sellers' Fees
EBay plans to cut the fees it charges sellers on its auction site, according to a presentation of the company's quarterly results.
Responding to complaints by its key network of auction sellers, eBay will reduce the upfront fees sellers must pay to insert new listings on its auction sites along with reductions in the final transaction fees they pay on successful sales.
"We are going to make breaks from the past," Donahoe told investors on a conference call to discuss eBay's 2007 year-end results.
Over the next week, eBay will announce changes in pricing of its services and improvements in the way buyers can rate sellers, Donahoe said.
"We are going to get very aggressive about making eBay easier to use," said Donahoe.
- Reuters contributed to this report.