EBay grows 1Q earnings but outlook falls short

EBay 1st-quarter earnings grow, revenue falls slightly below Wall Street's expectations

Associated Press

NEW YORK (AP) -- EBay's high-flying stock price declined in after-hours trading Wednesday after the e-commerce bellwether's outlook for the current quarter fell below Wall Street's expectations.

The company grew its earnings and revenue in the first quarter, as shoppers continued to flock to eBay.com and other sites and mobile apps, to buy everything from cars to handbags to wedding rings. EBay's payments unit, PayPal, continued its fast-paced growth and expansion beyond the Web. People can now use their PayPal accounts to make purchases in some brick-and-mortar stores. Nonetheless, eBay's revenue, along with its guidance for the current quarter, fell shy of Wall Street's expectations — though its full-year guidance stayed unchanged.

The San Jose, Calif.-based company's stock dropped by $1.60, or 2.9 percent, to $54.50 in after-hours trading. The stock closed down 91 cents at $56.10 in the regular session amid a broad market decline. That is up 10 percent since the start of the year and more than 55 percent from a year ago.

EBay's 2013 earnings forecast surpassed and revenue outlook met Wall Street's expectations, indicating that the second half of the year could be stronger than the first. EBay also recently issued an upbeat long-term forecast, saying it expects revenue to hit as much as $23.5 billion in 2015, up from 67 percent from $14.1 billion in 2012.

President and CEO John Donahoe said he wouldn't call eBay's second-quarter guidance cautious, adding that it's "highly consistent with what we thought."

"Expectations got a bit ahead of themselves," Donahoe said in a phone interview.

The company's business in Europe was "modestly softer" than expected amid the economic uncertainty there, Donahoe said, while the U.S. was slightly stronger than expected.

EBay said revenue at PayPal grew 18 percent to $1.55 billion and ended the quarter with 128 million registered accounts, up 16 percent from a year earlier. Its marketplaces unit, which includes eBay.com, grew revenue by 13 percent to $1.96 billion and ended the quarter with 116 million active users, an increase of 13 percent.

Some analysts are worried about short-term challenges EBay faces. Benchmark analyst Daniel Kurnos believes EBay is confronted with tight retail inventories and potential pressure on PayPal's profit margins from credit card companies, if they start charging fees for using the payments service.

EBay Inc. said Wednesday that it earned $677 million, or 51 cents per share, in the January-March period. That's up 19 percent from $570 million, or 44 cents per share, in the same period a year earlier.

Adjusted earnings were 63 cents per share, up from last year's 55 cents and a penny above analysts' expectations of 62 cents.

Revenue grew 14 percent to $3.75 billion, slightly below Wall Street expectations. Analysts polled by FactSet were looking for $3.77 billion.

For the current quarter eBay expects earnings of 46 to 48 cents per share and adjusted earnings of 61 to 63 cents per share. Analysts estimated 66 cents per share.

The company's revenue forecast of $3.8 billion to $3.9 billion is also slightly below the $3.95 billion analysts expected.

Gross merchandise volume, an important metric that measures all items sold on eBay excluding vehicles, rose 13 percent to $18.33 billion.

Mobile commerce remains a strong suit for eBay. The company said it gained 2.8 million new users during the quarter who signed up through a mobile device. EBay said its mobile apps have been downloaded 162 million times since launching in the first quarter of 2008.

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