EBay Quarterly Profit Rises 22%, Beating Forecasts|Reuters

Online auctioneer EBay posted a 22 percent rise in quarterly net profit, topping Wall Street's average estimate, as pricing changes drove auction listings and pushed revenue above all forecasts.

For 2008, eBay said it expects net revenue of $8.7 billion to $9.0 billion, boosting the growth rate by 2 to 3 percentage points above its downbeat full-year forecast issued in January -- and putting it in the top half of Wall Street expectations.

An Ebay sign is shown at Ebay offices in San Jose, Calif., Wednesday, July 20, 2005. The San Jose-based company said Wednesday that it earned $291.6 million, or 21 cents per share, for the three months ended in June, a 53 percent increase from $190.4 million, or 14 cents per share at the same time last year. (AP Photo/Paul Sakuma)
Paul Sakuma

EBay is in the midst of a long-term plan to revive growth in its core auctions business that involve sweeping changes to how buyers and sellers deal with one another on the site.

Buoyed by a buyback of 3 percent of its common shares, first-quarter net income rose to $459.7 million, or 34 cents a share, from the year-earlier quarter's $377.1 million, or 27 cents per share.

Revenue rose 24 percent to $2.19 billion. Revenue growth benefited from growth in eBay's international businesses, which generated 55 percent of revenue.

The effect of translating overseas currencies into dollars boosted quarterly sales by $110 million. U.S. revenue grew 16 percent while international sales grew at twice that rate, at 32 percent.

Excluding one-time items, the San Jose, California-based company reported a profit of $562 million, or 42 cents per diluted share, versus $460 million, or 33 cents per diluted share, a year ago. It spent $1 billion on share buybacks.

The reported profits topped analysts' average expectation by 3 cents per share, both in net terms and excluding one-time items, according to Reuters Estimates.

Wall Street was looking for an average profit, excluding items, of 39 cents per share.

The average net profit estimate was 31 cents a diluted share.

Revenue topped Wall Street expectations. Analysts had expected first-quarter revenue to reach $2.07 billion, on average, according to Reuters Estimates.

Forecasts ranged from $2.00 billion to $2.16 billion.

In January, the company had forecast first-quarter revenue of $2.00 billion to $2.05 billion and a profit, excluding one-time items, of 37 cents to 39 cents per share.

Also that month, eBay introduced controversial pricing and customer service standards for eBay sellers that have raised the cost for some sellers to do business on eBay.

After an initial dip in February, Wall Street analysts say the changes resulted in growth in new auction listings in six of the last seven weeks of the first quarter.

That reverses a declining trend prior to the changes, Jeffries & Co has noted.

First-quarter new listings rose 2 percent over the fourth quarter and 10 percent from a year ago.

But for merchandising improvements to translate into stepped-up eBay revenue growth, the company must do more to attract new buyers, analysts say.

In a sign that eBay may have begun making progress winning back users, the company reported that active users on the site grew 1 percent during the first quarter, the first increase in a year in the number of site users.

For the full year, the company predicted profit, excluding one-time items, to range from $1.70 to $1.75 per share.

Analysts, on average, had expected $1.68 per share, according to Reuters Estimates.

In January, eBay had predicted full-year earnings, excluding one-time items, of $1.63 to $1.67 per diluted share.

For the second quarter, the company expects net revenue in a range of $2.10 billion to $2.15 billion.

Excluding one-time items, it predicted a profit of 39 cents to 41 cents a share.

The forecasts match or are near the top half of Wall Street forecasts both in profit and revenue terms.

The higher estimates for the full year suggest the company expects further improvements in its business to come later in the year.

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