EBay Inc on Wednesday reported a sharp drop in quarterly net profit as the weak economy took a big bite out of its core online auction business.
EBay said net profit was down 31 percent in the fourth quarter from a year ago to US$367 million, while revenue fell 7 percent to US$2.04 billion, lower than for the same period last year.
The San Jose, California, company reported earnings per share of US$0.41, slightly better than the US$0.39 expected by analysts.
AUCTION REVENUE
Online auction revenue fell 16 percent during the quarter to US$1.27 billion.
“The revenue drop was attributable to the impact made by the strengthening dollar and the slow-down of the e-commerce market globally on the eBay business,” the company said.
Revenue growth for other Internet businesses such as PayPal and Skype helped limit the damage in the fourth quarter.
PAYPAL AND SKYPE
PayPal’s revenue rose by 11 percent to US$623 million during the quarter, while Skype’s revenue was up 26 percent to US$145 million.
For the full year, eBay said it posted net profit of US$1.78 billion, up from US$348 million in 2007, when its results were impacted by goodwill amortization worth US$1.39 billion.
“While the holiday season was tough and competitive, our overall results for 2008 were strong,” eBay chief executive John Donahoe said in a statement.
DIVERSE PORTFOLIO
“For 2008, we delivered double-digit revenue and earnings growth; made significant changes in our eBay business; and built a stronger, more diverse portfolio of leading e-commerce businesses,” he said.
“We will build on our strengths in 2009 while managing our business prudently in the continued challenging environment,” he said.
EBay said it expected revenue of between US$1.8 billion and US$2.05 billion in the first quarter of the fiscal year.
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