eBay markets a solid report but sees headwinds

E-COMMERCE giant eBay reported solid second-quarter results yesterday but chief executive John Donahoe warned of economic “headwinds” in the second half of the year from Europe and Korea.

Those comments, and weaker-than-expected third-quarter forecasts, sent shares down six per cent in after-hours trading.

“It’s not a quarter in which they absolutely crushed it,” said Ron Josey, an analyst at JMP Securities. “They are doing well, but people were hoping for more.”

Second-quarter net income was $822m (£540m), or 63 cents a share, versus $730m, or 56 cents a share, in the same period a year earlier. Revenue rose 14 per cent to $3.88bn. EBay was expected to earn 63 cents a share on revenue of $3.89bn, according to Thomson Reuters.

“Macroeconomic headwinds in Europe and Korea will continue to be a challenge in the second half of the year,” Donahoe said. “But our core businesses are strong.”

EBay lagged rival Amazon.com for several years, but chief executive John Donahoe has led a turnaround that focuses on mobile shoppers, international expansion and tie-ups with local physical stores. eBay is spending heavily on these initiatives, and hopes they will fuel revenue and profit growth in coming years.

EBay’s third-quarter forecasts were weaker than expected, while the company stuck to its full-year guidance.

EBay shares fell six per cent to $53.94 in after-hours trading yesterday. They had closed up nearly one per cent.