Auctions Not On EBAY's Fave-List: AMZN Continues Win Streak
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EBay Slumps After Growth Plan Takes Toll on Profit (Update2)
By Joseph Galante
Oct. 22 (Bloomberg) -- EBay Inc., the most visited U.S. e- commerce site, slumped in Nasdaq trading after a shift to faster-growing yet lower-margin businesses hampered its profit forecast.
Excluding some costs, fourth-quarter earnings will be 38 cents to 40 cents a share, the San Jose, California-based company said yesterday. The midpoint of that range missed the 40 cents predicted by analysts in a Bloomberg survey.
Chief Executive Officer John Donahoe, who took over last year, is steering EBay toward fixed-price sales and away from its former hallmark of auctions. He’s also building up the company’s PayPal and Bill Me Later payment services, which carry lower profit margins. And EBay is offloading its Skype Internet- phone unit -- a move that will hurt profit this quarter -- because the business doesn’t fit with the rest of the company.
“People are just looking at the earnings guidance for the fourth quarter, which is a little below the Street’s expectations,” said Aaron Kessler, an analyst at Kaufman Bros. in San Francisco. He recommends buying the shares and doesn’t own any. “They’re heading in the right direction. It’s not going to be an easy road.”
EBay fell $1.06, or 4.2 percent, to $23.97 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have gained 72 percent this year.
Skype Breakup
EBay’s forecast didn’t include a full quarter’s worth of results from Skype, a business that lets users place calls over the Internet. The company expects to complete the sale of Skype about halfway through the quarter.
Third-quarter net income declined 29 percent to $349.7 million, or 27 cents a share, from $492.2 million, or 38 cents, a year earlier. Sales rose to $2.24 billion, topping estimates of $2.14 billion. Excluding some items, earnings were 38 cents a share, compared with the 37 cents predicted by analysts.
Sales this quarter will be $2.2 billion to $2.3 billion, EBay said. Analysts had projected $2.26 billion.
EBay’s Marketplaces unit, which includes its main site, StubHub and Shopping.com, grew 4 percent last quarter, excluding currency fluctuations. That likely outpaced the broader e- commerce market, Donahoe said.
“We’re seeing progress on our turnaround,” he said in an interview. “People are buying with more frequency on EBay than in the market.”
Forrester Research Inc. predicts that total online sales in the U.S. will expand 13 percent next year and 10 percent in 2011.
Comeback Plan
EBay’s turnaround plan has included changing listing fees and fighting fraud. The company also has revamped its search feature to make it easier to find items.
This month, EBay said it would eliminate about 60 workers. It also announced plans in May to close a 700-person customer- service office in Vancouver.
While EBay attracts more visitors than any other U.S. e- commerce site, it has lost customers to Amazon.com Inc., the world’s largest online retailer. The shift toward fixed-price transactions is an effort to tap faster-growing markets.
EBay is selling Skype to a group of investors led by private-equity firm Silver Lake. EBay had originally planned to spin off Skype as an initial public offering, saying the business had little synergy with the parent company.
Skype’s revenue rose 29 percent to $185.2 million last quarter. The service added 40.3 million users in the period and now has more than 520.8 million in total.
Excluding Skype’s 13-cent per-share contribution to earnings, EBay’s profit for the full year will be $1.41 to $1.43, the company said.
Revenue at EBay’s payments business advanced 15 percent to $688.1 million last quarter. Active accounts rose 19 percent to 78 million as the service began working with more Web sites.
PayPal competes with Discover Financial Services and Visa Inc., as well as smaller companies such as Obopay Inc. EBay expects PayPal to eventually become its biggest business, with revenue reaching $5 billion by 2011.
To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net
Last Updated: October 22, 2009 16:10 EDT
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Amazon.com, Inc.(NasdaqGS: AMZN)
After Hours: 106.98 +13.53 (+14.48%) 7:59pm ET
YIKES!!!!!!!!!!!
By Joseph Galante
Oct. 22 (Bloomberg) -- EBay Inc., the most visited U.S. e- commerce site, slumped in Nasdaq trading after a shift to faster-growing yet lower-margin businesses hampered its profit forecast.
Excluding some costs, fourth-quarter earnings will be 38 cents to 40 cents a share, the San Jose, California-based company said yesterday. The midpoint of that range missed the 40 cents predicted by analysts in a Bloomberg survey.
Chief Executive Officer John Donahoe, who took over last year, is steering EBay toward fixed-price sales and away from its former hallmark of auctions. He’s also building up the company’s PayPal and Bill Me Later payment services, which carry lower profit margins. And EBay is offloading its Skype Internet- phone unit -- a move that will hurt profit this quarter -- because the business doesn’t fit with the rest of the company.
“People are just looking at the earnings guidance for the fourth quarter, which is a little below the Street’s expectations,” said Aaron Kessler, an analyst at Kaufman Bros. in San Francisco. He recommends buying the shares and doesn’t own any. “They’re heading in the right direction. It’s not going to be an easy road.”
EBay fell $1.06, or 4.2 percent, to $23.97 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have gained 72 percent this year.
Skype Breakup
EBay’s forecast didn’t include a full quarter’s worth of results from Skype, a business that lets users place calls over the Internet. The company expects to complete the sale of Skype about halfway through the quarter.
Third-quarter net income declined 29 percent to $349.7 million, or 27 cents a share, from $492.2 million, or 38 cents, a year earlier. Sales rose to $2.24 billion, topping estimates of $2.14 billion. Excluding some items, earnings were 38 cents a share, compared with the 37 cents predicted by analysts.
Sales this quarter will be $2.2 billion to $2.3 billion, EBay said. Analysts had projected $2.26 billion.
EBay’s Marketplaces unit, which includes its main site, StubHub and Shopping.com, grew 4 percent last quarter, excluding currency fluctuations. That likely outpaced the broader e- commerce market, Donahoe said.
“We’re seeing progress on our turnaround,” he said in an interview. “People are buying with more frequency on EBay than in the market.”
Forrester Research Inc. predicts that total online sales in the U.S. will expand 13 percent next year and 10 percent in 2011.
Comeback Plan
EBay’s turnaround plan has included changing listing fees and fighting fraud. The company also has revamped its search feature to make it easier to find items.
This month, EBay said it would eliminate about 60 workers. It also announced plans in May to close a 700-person customer- service office in Vancouver.
While EBay attracts more visitors than any other U.S. e- commerce site, it has lost customers to Amazon.com Inc., the world’s largest online retailer. The shift toward fixed-price transactions is an effort to tap faster-growing markets.
EBay is selling Skype to a group of investors led by private-equity firm Silver Lake. EBay had originally planned to spin off Skype as an initial public offering, saying the business had little synergy with the parent company.
Skype’s revenue rose 29 percent to $185.2 million last quarter. The service added 40.3 million users in the period and now has more than 520.8 million in total.
Excluding Skype’s 13-cent per-share contribution to earnings, EBay’s profit for the full year will be $1.41 to $1.43, the company said.
Revenue at EBay’s payments business advanced 15 percent to $688.1 million last quarter. Active accounts rose 19 percent to 78 million as the service began working with more Web sites.
PayPal competes with Discover Financial Services and Visa Inc., as well as smaller companies such as Obopay Inc. EBay expects PayPal to eventually become its biggest business, with revenue reaching $5 billion by 2011.
To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net
Last Updated: October 22, 2009 16:10 EDT
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Amazon.com, Inc.(NasdaqGS: AMZN)
After Hours: 106.98 +13.53 (+14.48%) 7:59pm ET
YIKES!!!!!!!!!!!
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
0
Comments
I can suggest a good place to start.
<< <i>This month, EBay said it would eliminate about 60 workers. It also announced plans in May to close a 700-person customer- service office in Vancouver. >>
Oh, that should make everything run a lot smoother.
- John Wooden
<< <i>Im sorry but i hope they loose alot more, until they realize it isnt just the buyers who should have total control over sellers and have it back to the mid point to where sellers can defend themselves from shady buyers, they took that all away when they redid the feedback system among other whoa's for sellers, just my honest opinion.,,,bj >>
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Amazon.com, Inc.(NasdaqGS: AMZN)
Real-Time: 116.58 +23.13 (+24.75%) 2:02pm ET
Shoppers have spoken; JD heard them, and he has ZERO chance
of displacing AMZN. He won't even get his fair share of the pie.
THAT may be a good thing for collectible buyers/sellers.
After JD is out the door - with his $30-million+ parachute - it is
possible that EBAY will reconnect with its roots:
Used merch trading between cautious and aware buyers/sellers.
The CL-model works and LOTS of folks inside of EBAY know that.
The current scheme that puts ALL sellers at risk of being STOLEN
from by corrupt buyers, was ONLY implemented as a weapon to
compete with AMZN. When it becomes absolutely OBVIOUS to
everybody that the EBAY vs. AMZN war is LOST, EBAY's anti-seller
policies can be easiliy unwound.
PayPal and other payment platforms are the economic future of
EBAY. They have NO future in mass-retailing of NEW merch.
possible that EBAY will reconnect with its roots:
Used merch trading between cautious and aware buyers/sellers."
That type of sale helped them to get to the "top", but today anything outside the small window of "cautious and aware" has to cost Ebay a lot headaches and money to watch over.
<< <i>"After JD is out the door - with his $30-million+ parachute - it is
possible that EBAY will reconnect with its roots:
Used merch trading between cautious and aware buyers/sellers."
That type of sale helped them to get to the "top", but today anything outside the small window of "cautious and aware" has to cost Ebay a lot headaches and money to watch over. >>
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Fraudulent SNAD-claims are killing - have killed - many categories.
Once SNAD-claims are moved to the credit-card companies - away
from PayPal - EBAY can get back to being the ONLY thing it is fit to
be. A used-item venue.
Currently, on sales outside of EBAY, PayPal is a dream to use. Soon,
I suspect it will be on EBAY, too.
When I shop online for non-cardboard related items, I look at costco.com, walmart.com, etc....I don't even bother with ebay or amazon. I also can't see ebay ever becoming a popular marketplace for new goods.