EBay outlook cautious as revenues rise

City A.M. Reporter
EBAY reported profit that matched Wall Street estimates yesterday, but gave a restrained outlook for the rest of the year, sending its shares lower.

Excluding stock-based compensation expenses and other items, the operator of the largest online marketplace reported profit of $628.2m (£398m), or 48 cents a share, in the latest period. Revenue climbed 32 per cent to $2.97bn.

Third-quarter net income was $490.5m, or 37 cents a share, compared to $432m, or 33 cents a share, a year earlier. EBay was expected to earn 48 cents a share on revenue of $2.91bn.

“Not a spectacular quarter,” said R J Hottovy, equity analyst at Morningstar. “It was essentially in line, which may have disappointed the market.”

EBay forecast fourth-quarter profit of 55 cents to 58 cents a share, while analysts were looking for 58 cents a share. The company also forecast full-year revenue of $11.5bn to $11.6bn and full-year profit of $1.98 to $2.01 a share.

When eBay reported second-quarter results in July, the company forecast full-year revenue of $11.3bn to $11.6bn and full-year profit of $1.97 to $2.00 a share.

“Investors were assuming there would be upside surprise in earnings or the guidance,” said Fred Moran, an analyst at Benchmark Capital.

“They maintained their full-year forecast essentially, which reflects a little caution around the global economy,” Moran added. “Management could increase forecasts later in the year, but things are too volatile right now to stick one’s neck out.”

EBay president and chief executive John Donahoe said more and more customers were choosing to shop through smartphones, with the company expecting mobile commerce to generate almost $5bn in merchandise volume this year.

“Mobile is one way online and offline shopping are blending into a single commerce environment, said Donohoe.

“We are focused on enabling commerce, helping consumers shop anytime, anywhere, and being the commerce partner of choice for retailers of all sizes.”

EBay shares fell four per cent to $31.90 in after-hours trading.