eBay Slips As Bidders Balk
Economic slowdown stings online auctioneer.
So much for selling to the highest bidder.
Online auction powerhouse eBay (EBAY) reported weak fourth quarter numbers yesterday, as revenues slipped from a year ago for the first time in the company's history. Attributing its troubles to a stronger dollar (which hurts revenues from overseas markets) and the global economic slowdown, CEO John Donahoe is spearheading efforts to shift sales away from its core auction business, focusing instead on traditional, fixed price sales.
According to Bloomberg:
- Revenue fell 6.7% from last year to $2.07 billion.
- Earnings slipped to $367 million, or $0.29 per share from $0.39 per share in Q4 2007.
- Revenue in its mainstay marketplace business slipped 16%.
- First quarter 2009 earnings guidance of $0.32 - $0.34 per share was lower than the expected $0.39 per share.
Many investors had been hopeful eBay would thrive during the economic downturn, as consumers seek out more attractively priced goods. However, with buying activity drying up and other online commerce sites like Amazon.com (AMZN) pushing auction platforms of their own, eBay is facing an increasingly challenging environment.
As it has rotated its business away from its core auction business buy acquisitions of StubHub, PayPal, Skype and launching Kijiji to compete with free classified listing site Craigslist, eBay has increasingly exposed itself to broader economic conditions. And with 55% of its marketplace business coming from outside the US, the global economic slowdown isn't providing eBay much benefit from geographic diversification.
eBay also said its PayPal unit posted strong results, with revenues rising 11% to $623 million. Of note, the company's online credit service, Bill Me Later saw particularly high activity. PayPal earns interest income like a credit card company if users opt for Bill Me Later, which gives them the option of deferring payments.
Deferring payments, apparenly, is a popular choice in today's economy.
The information on this website solely reflects the analysis of or opin=
=3D =3D3D ion about the performance of securities and financial markets by =
the wr=3D iter=3D3D s whose articles appear on the site. The views expresse=
d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi=
a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web=
site is intended to con=3D stitute a recom=3D3D mendation or advice address=
ed to an individual investor =3D or category of inve=3D3D stors to purchase=
, sell or hold any security, or to =3D take any action with re=3D3D spect t=
o the prospective movement of the securit=3D ies markets or to solicit t=3D=
3D he purchase or sale of any security. Any inv=3D estment decisions must b=
e made =3D3D by the reader either individually or in =3D consultation with =
his or her invest=3D3D ment professional. Minyanville write=3D rs and staff=
may trade or hold position=3D3D s in securities that are discuss=3D ed in =
articles appearing on the website. Wr=3D3D iters of articles are requir=3D =
ed to disclose whether they have a position in =3D3D any stock or fund disc=
us=3D sed in an article, but are not permitted to disclos=3D3D e the size o=
r direct=3D ion of the position. Nothing on this website is intende=3D3D d =
to solicit bus=3D iness of any kind for a writer's business or fund. Mi=
ny=3D3D anville mana=3D gement and staff as well as contributing writers wi=
ll not respo=3D3D nd to em=3D ails or other communications requesting inves=
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter