UPDATE: CEO Says EBay On Track Despite Auction Concerns
Thursday July 17th, 2008 / 0h28
DOW JONES NEWSWIRES EBay Inc. (EBAY) Chief Executive John Donahoe said Wednesday the e-commerce giant was on track to boost growth in its core auction business, despite disappointing year-over-year growth in some key metrics that pushed the company's shares lower. "We are seeing some early, encouraging signs from the changes we're making," Donahoe told analysts on a conference call after the company reported slightly better than expected second-quarter results, but issued a disappointing third-quarter outlook. EBay, which earlier this year announced steps to restart growth in its main auction business, said second-quarter marketplace revenue was up 13%, half the growth rate from a year ago. The value of goods sold on eBay sites, known as gross merchandise volume or GMV, was up 8% to $15.7 billion, but down from a 12% hike last year. The company said GMV was dramatically impacted by lower average selling prices, which fell in part because economic weakness was driving consumers to buy lower-priced items. But eBay said new listings on its sites were up 19% year over year, and the number of active users grew 1% from the same period last year. Chief Financial Officer Bob Swan noted the company increased guidance for the rest of the year and he stressed that it was focused on driving traffic to its sites, which it will be able to monetize not only through listing and sales fees, but also through advertising and its PayPal unit. But analysts remained skeptical that eBay was showing progress in its efforts to re-accelerate its core auction business. "GMV and active user trends suggest (a) real turnaround (is) not yet in sight," said Citi analyst Mark Mahaney in a note. EBay recently reduced upfront listing fees to attract more sellers in a bid to offset slowing growth in its auction business in recent years. It has also taken steps to improve trust between buyers and sellers, and make it easier for buyers to find items they want, amid intense competition from rivals such as Amazon.com, Inc. (AMZN). Revenue at the company's PayPal unit, an online payments processor, surged 33% as total payments volume grew 35%. Skype revenue rose 51% as the Internet-telephony business added 29 million registered users during the quarter. "While PayPal revenue, Skype revenue, and margins were encouraging, we believe investors were looking for eBay's GMV to improve, which has not taken place," said Goldman Sachs analyst James Mitchell in a note. Meanwhile, eBay said the head of its core marketplaces unit would step down in October. He will be replaced by Lorrie Norrington, who most recently was president of eBay Marketplaces Operations. EBay earlier said second-quarter net income rose to $460 million, or 35 cents a share, from $376 million, or 27 cents a share, a year earlier. Excluding items, the company recorded per-share earnings of 43 cents, up from 34 cents a year earlier and the Thomson Reuters estimate of 41 cents. Revenue rose 20% to $2.2 billion, surpassing the average analyst estimate of $2.17 billion. The company was expecting earnings of 39 cents to 41 cents a share before items on revenue of $2.1 billion to $2.15 billion. Shares in eBay slipped almost 7% to $26.17 in after-hours trading. -By Scott Morrison, Dow Jones Newswires; 415-765-6118; scott.morrison@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=tbcz0xXX1Jauzo6mglEnJg%3D%3D. You can use this link on the day this article is published and the following day.
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