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EBay 2Q profit falls as marketplaces revenue drops

July 23, 2009|Associated Press

SAN FRANCISCO — The recession continued to hurt EBay Inc. in the second quarter as earnings and revenue fell amid a sales decline in the main online marketplace, overshadowing growth in the PayPal online payments and Skype communications units.

The pioneer of online auctions, which is trying to revitalize its website, managed to beat Wall Street's expectations, though, and predicted third-quarter earnings and revenue largely in line with analysts' views.

EBay shares rose 90 cents, or 4.6%, in extended trading after the results were released Wednesday. They finished regular trading up 52 cents, or nearly 3%, at $19.45.

The San Jose company said it earned $327.3 million, or 25 cents a share, in the April-June period, a 29% decrease from $460.3 million, or 35 cents, a year earlier.

The company earned 37 cents a share after excluding one-time items, beating by a penny the predictions made by analysts polled by Thomson Reuters.

Revenue fell 5% to $2.1 billion, slightly ahead of analysts' estimates of $1.99 billion.

Revenue from EBay's marketplaces unit, which includes EBay, Shopping.com and other e-commerce websites, sank 14% to $1.26 billion -- a decline that the company attributed to the weak economy and strength in the dollar. When the dollar is stronger, transactions in other currencies translate into fewer dollars.

The company's payments unit, which includes online payment service PayPal and short-term credit service Bill Me Later, saw revenue climb 11% to $669.3 million.

Revenue from online telecommunications service Skype jumped 25% to $170 million. EBay said in April that it planned to spin Skype off in the first half of 2010 through an initial public offering, undoing the $2.6-billion acquisition it made in 2005. The company ended up taking a $900-million write-down on Skype in 2007 -- basically acknowledging that it had significantly overvalued the service.

EBay's U.S. gross merchandise volume -- which measures the value of all transactions on EBay, excluding vehicles -- fell 10% to $11.13 billion for the quarter. The number of active users, an indicator of how well the company is able to attract new buyers and sellers, inched up just 2% to 88.4 million.

For the current quarter, EBay forecast a profit of 22 cents to 24 cents a share, or 34 cents to 36 cents on an adjusted basis, on $2.05 billion to $2.15 billion in revenue. Analysts were looking for a profit of 35 cents a share on $2 billion in sales.

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