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Fri, Oct 17, 2008 - Page 10 News List

eBay posts strong earnings for Q3

AFP , NEW YORK

Online auction giant eBay Inc posted third-quarter earnings on Wednesday of US$492 million that surpassed expectations, but forecast a weaker outlook for the remainder of the year.

EBay’s profits compared with a loss of US$936 billion in the same period last year, primarily because of a writedown for its Internet telephony service Skype.

Earnings per share in the third quarter were US$0.46 on an adjusted basis, better than the expectations of analysts of US$0.41 per share.

EBay said revenue rose 12 percent in the third quarter to US$2.12 billion.

The Internet auction house forecast earnings per share of between 39 and US$0.41 in the fourth quarter, below the US$0.47 expected by analysts, and US$1.69 to US$1.71 for the entire year, off the expected US$1.73.

“Overall, we are pleased with the performance of the portfolio this past quarter,” eBay president and chief executive John Donahoe said in a statement.

“We took a number of steps during the quarter to further strengthen our business and better align our cost structure to invest and compete,” he said.

“We will continue to stay focused on connecting consumers on our various e-commerce platforms, maintaining financial discipline and capitalizing on new opportunities for growth,” Donahoe said.

In a conference call with reporters after the results were released, Donahoe said “we expect a very challenging fourth-quarter holiday season for consumers who will be cautious with their spending.”

“We intend to fight aggressively for demand in the fourth quarter to support our sellers and to augment demand,” he said.

EBay said its online auction activities contributed most of its revenue during the third quarter — US$1.38 billion, up 4 percent from the same period last year but down 6 percent from the previous quarter.

EBay reported growth of Skype, the online payment service PayPal and global classifieds.

PayPal’s revenue rose to US$597 million in the third-quarter, up 27 percent over the same period last year, while Skype reported revenue of US$143 million, up 46 percent over the same period last year.

The San Jose, California-based company announced on Monday last week that it was cutting its global workforce by about 10 percent to streamline its organization and cut costs.

EBay’s core online auction business has experienced poor growth recently.

Increased competition from sites such as Internet retail giant Amazon have eaten into its market share.

EBay’s share price fell 13.59 percent on the NASDAQ on Wednesday to US$15.33 and continued to slide in after-hours trading after the third-quarter results were announced.

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