EBay Earnings Hit Target but Outlook Falls Short

EBay Earnings Top Forecasts, Outlook Is In-Line
David Paul Morris | Bloomberg | Getty Images

EBay reported holiday quarter earnings and revenue that were in line with analysts' expectations but the company's guidance fell short of estimates on Wednesday.

After the earnings announcement, eBay stock initially ticked lower but later turned positive in extended-hours trading. (Click here to get the latest quotes for the company's shares.)

Net income fell to $751 million, or 57 cents per share, from $1.98 billion, or $1.51 a share.

Excluding charges for stock-based compensation, amortization and $31 million in restructuring expenses, the online marketplace earned $927 million, or 70 cents per share, up from $789 million, or 60 cents a share, in the year-earlier period.

Revenue increased 18 percent to $3.99 billion from $3.38 billion a year ago.

Expectations were high ahead of the results because sales data from outside sources suggested strong sales growth from eBay's online marketplace and a solid increase in transactions processed by the company's PayPal payments business.

EBay's online marketplace, one of the largest in the world, has lagged behind the growth of e-commerce and Amazon.com for several years. But under Chief Executive John Donahoe, eBay has invested to improve the buying experience by upgrading search capabilities and prodding sellers to provide more services such as free shipping and easier returns.

The explosive growth of mobile shopping and popular mobile shopping applications have also attracted hundreds of thousands of new consumers to eBay's marketplace in the past year.

"Generally speaking the results are very much in line with expectations," said R.J. Hottovy, an equity analyst at Morningstar.

But the company's outlook for the first quarter fell short: EBay projects earnings of 60 to 62 cents a share on revenue of $3.65 billion to $3.75 billion. Analysts currently expect earnings per share of 63 cents on revenue of $3.80 billion.

For the full year 2013, the company expects to earn $2.70 to $2.75 a share, below Wall Street's forecasts of $2.74 a share.