Fri, Jul 20, 2012 - Page 15 News List

EBay defies global economic crisis by doubling Q2 profits

AP, NEW YORK

EBay Inc more than doubled its second-quarter net income thanks to higher revenue from its PayPal online payments business and its e-commerce Web sites.

The solid results, which came against the backdrop of the ongoing European economic turmoil, prompted investors to send the company’s stock up nearly 6 percent in after-hours trading.

The San Jose, California-based company makes most of its money by charging merchants a fee to list items posted for sale. It also generates revenue from PayPal transaction fees.

Besides its namesake online marketplace, eBay also owns StubHub, a ticket-selling Web site, Shopping.com and GSI Commerce, a provider of e-commerce and online marketing services.

While PayPal business has been going strong for several quarters, a real surprise was its marketplaces business and CEO John Donahoe said the marketplaces business saw its strongest growth since 2006.

Marketplaces’ gross merchandise volume, an important metric that measures all items sold on eBay excluding vehicles, rose 10 percent to US$16 billion.

In all, eBay earned US$692 million, or US$0.53 per share, in the period from April to last month. That figure is up from US$283 million, or US$0.22 per share, in the same period a year earlier.

Adjusted earnings were US$730 million, or US$0.56 per share, in the latest quarter — US$0.01 above analysts’ expectations.

Revenue grew 23 percent to US$3.4 billion from US$2.76 billion. Analysts, on average, were expecting revenue of US$3.36 billion, according to FactSet.

The growth of mobile shopping will likely continue to propel eBay’s earnings. The company expects eBay and PayPal to each conduct US$10 billion in transactions this year, more than double last year’s transactions.

Donahoe called it “a staggering surge in mobile shopping and payments on devices that did not exist just a few years ago.”

For the current quarter, eBay is forecasting adjusted earnings of US$0.53 to US$0.55 per share and expecting revenue of US$3.3 billion to US$3.4 billion.

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