EBay trounces expectations as Q1 profit surges 52%
EmptySAN FRANCISCO -- EBay Inc. reported Wednesday that first-quarter profit surged 52%, trouncing Wall Street expectations thanks to big-spending shoppers overseas and scorching performance of its PayPal electronic transaction division.
Despite lackluster growth in the total number of listings on the world's largest online auction, eBay earned $377.2 million, or 27 cents per share, for the three months ended March 31. It earned $248.3 million, or 17 cents per share, in the year-ago period.
First-quarter revenue totaled $1.77 billion, up 27% from $1.39 billion a year ago.
"It was a very strong quarter across the board," eBay President and Chief Executive Meg Whitman told The Associated Press. She added that the company, which spent $333 million last quarter in a stock buyback program, would repurchase up to $2 billion in additional shares through January 2009.
Excluding charges unrelated to ongoing operations, eBay earned $460.5 million, or 33 cents per share, up 34% from the same quarter last year, when eBay earned $342.9 million, or 24 cents per share.
On that basis, which does not comply with generally accepted accounting principles, eBay was expected to earn $408.72 million, or 30 cents per share, on sales of $1.72 billion, according to analysts polled by Thomson Financial.
EBay shares fell 75 cents, or nearly 3%, to close Wednesday at $34.45 on the Nasdaq Stock Market. After the report was released, shares gained $1.15 in after-hours trading.
EBay, which already owns Internet phone service Skype and portals such as Shopping.com and Rent.com, completed the buyout of online ticket reseller StubHub for $310 million last quarter. EBay ended the quarter with $3.5 billion in cash -- but it may not be as acquisitive this quarter, Whitman said.
"If we see acquisitions that strengthen our position in e-commerce, payments or telecommunications, we'll take them -- but there's nothing on horizon this very minute," she said.
During the quarter, 82.9 million active eBay users exchanged $14.28 billion in goods, ranging from pricey real estate and cars to cell phones and shoes.
EBay posted revenue of $884.9 million in the United States last quarter, up only 18% from the year-ago quarter. But the company took in $883.2 million abroad, up 38% from the first quarter of 2006. International sales now account for about half of total revenue.
The company is particularly focused on cracking potentially lucrative Asian markets. In December, eBay entered a joint venture with Beijing-based wireless Internet company TOM Online Inc. Whitman said Wednesday that the companies will launch a new site early this summer, and it will be operated entirely by Chinese workers and stored on servers in China.
Users posted 588 million listings in the quarter, up only 2% from the 575 million listings in the year-ago period -- a far smaller growth rate than eBay typically records.
Whitman said Wednesday she was disappointed with the tepid listings growth. She said it was the result of an ambitious effort to reduce the amount of overpriced commodity items that have increasingly clogged up the site -- such as thousands of cell phone chargers, outdated MP3 players and other electronic devices, often with high starting bids and reserve prices.
"I think we made a couple mistakes in the middle of last year. ... We frankly had too many items on the site," Whitman said.
The company has been tweaking seller fees to encourage smaller starting bids, and representatives have been calling individual sellers reminding them to abide by fair-use policies. EBay is taking a more active role in combatting the growing incidence of fraud, identity theft and privacy invasions.
Because of the clampdown, Whitman said, the percentage of users who buy items is increasing.
"Conversion rates are going back up, so sellers are seeing more success -- and if history is any guide, supply follows demand," she said. "We always anticipated a lag in listings growth. We are not unduly concerned."