EBay holiday quarter outlook disappoints on U.S. weakness

Reuters

By Phil Wahba

Oct 16 (Reuters) - EBay Inc on Wednesday gave adisappointing holiday forecast, saying the U.S. economicenvironment, including consumer confidence, had deteriorated inpart because of the shutdown of the U.S. government.

Shares of the e-commerce company fell 5.7 percent inafter-hours trading.

Chief Financial Officer Bob Swan told investors on aconference call that industry growth rates for e-commerce hadshrunk to about 13 percent in the third quarter, from about 16percent in the previous quarter.

"We really haven't seen any more positive signs in October,"he added.

Earlier in the day, U.S. Senate leaders announced a deal toreopen the government and avert a U.S. debt default.

But the deal would only fund the government until Jan. 15,so Americans face the possibility of another governmentshutdown.

"We won't know until weeks from now, and I hope this dealsticks," eBay Chief Executive John Donahoe said when asked ifthe end of the conflict would lift mood of shoppers.

Data firm ShopperTrak has forecast the slowest holiday salesgrowth since 2009, and last week, September retail sales showedU.S. shoppers were cautious, following a disappointing secondquarter for many retailers.

U.S. consumer confidence slid last month to its lowest since May, according to a report released in late September bythe Conference Board, an industry group.

EBay expects revenue of between $4.5 billion and $4.6billion for the fourth quarter, ending Dec. 31, compared withthe $4.64 billion estimated by analysts, according to ThomsonReuters I/B/E/S.

Net income for its third quarter was $689 million, or 53cents a share, up from $597 million, or 45 cents a share, a yearearlier. Excluding the benefit of its sales of stakes ine-commerce companies RueLaLa and ShopRunner, eBay earned 64cents, one cent better then expected. Revenue rose 14.3 percentto $3.89 billion.

For the holiday quarter, eBay expects a profit of 79 centsto 81 cents a share, while Wall Street analysts estimate 83cents.

The company kept its full-year forecasts, but CFO Swan saidrevenue and profits are likely to come in at the low end ofeBay's forecast.

PayPal, eBay's online payments division, reported that totalpayments volume rose 24.7 percent to $43.8 billion.

EBay lagged behind rival Amazon.com Inc for severalyears, but Donahoe has led a turnaround in recent years thatfocuses on mobile shoppers, international expansion and tie-upswith local physical stores. Amazon, whose shares fell 1.2percent in after-hours trade on Wednesday, reports results nextweek.

EBay said that gross merchandise volume, or the dollar valueof merchandise sold on its marketplaces, rose 12.7 percent to$18.4 billion in the United States, excluding auto sales.

EBay said the environment in Europe and Asia was mostlystable. In July, the company said Europe was weighing on itsresults.

The e-commerce company's third-quarter profit was boosted byits PayPal online payments business as consumers made greateruse of its PayPal service.

This summer, eBay expanded its eBay Now same-day deliveryservice into new markets and last month bought payments gatewayBraintree for about $800 million to strengthen PayPal's presenceon mobile devices.

To compete with Amazon's Prime service, PayPal is offeringfor a limited time free two-day shipping for items paid for withthat service.

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