EBay announces third quarter earnings

United States, October 16: EBay Inc., world's largest auction website, announced its third quarter financial results with a 5 percent increase in the company's net earnings to $492 million on Wednesday. However, there has been a significant decline in consumer spending amidst the country's current economic meltdown.

Expressing deep concern over the company's financial prospects, an eBay official said that lowered consumer spendings are hampering the growth of eBay, and he anticipated that continued weak spending would reduce revenue for the remaining year.

The company which had earlier estimated a revenue of $8.8 bllion to $9.05 billion for this year, initimated the analysts that it could go as low as $8.53 billion. As against the Wall Street's estimate of $2.43 billion for the fourth quarter, the company expects revenue of $2.02 billion to $2.17 billion.

EBay opened at $17.01 on Wednesday but gradually went down along with the rest of the market. It was closed at $15.33 and in after-hours trading tottered at even below its 52-week low of $15.00.

Company CEO, John J. Donahoe said, “These are turbulent times for which no one has a playbook.”

EBay's Gross Merchandise Volume (an important scale for growth measurement) for its third quarter amounted to $14.28 which accounts for a 1 percent fall from the same period last year. Though, increased by 8 percent in the second quarter, the volume still showed a huge decline from the heavy double-digit growth of earlier periods.

Youssef Squali, an analyst with Jeffries & Sons said, "The biggest surprise was the first decline ever in gross merchandise volume, particularly outside the United States. This is the biggest red flag."

For the third quarter, the company swung to a profit of $492 million at 38 cents a share. The shares fell more than 5 percent, to $14.46, in after-hours trading subsequent to the announcement, therefore extending a 13.6 percent decline in regular trading hours on Wednesday . EBay expects fourth-quarter adjusted earnings of 39 cents to 41 cents a share. Squali stated, “It was not a clean quarter, to say the least.”

Nonetheless, the company surely seems to be making money from its PayPal unit, which reported 27 percent growth and $597 million in revenue. Another eBay property named 'Skype' is also spreading positivity in the company with a 46 percent growth in revenue by adding a total of 32 million new users.

Donahoe said, “We delivered strong results in a very challenging time.”

Without looking back, EBay now plans to accquire the online payment firm Bill Me Later and two Danish classified advertising companies by paying a total of $1.35 billion.