EBay Tops Forecasts on Holiday Sales

The results were the best ever for eBay, an e-commerce pioneer founded in 1995.

Online shopping has since become a staple for hordes of consumers, turning eBay into a thriving business and a Wall Street favorite.

But the growing popularity of smartphones and tablet computers is once again changing the way many people shop. EBay is trying to remain at the forefront by retooling its online bazaar and popular payment service, PayPal, to work better with mobile devices.

The company, based in San Jose, Calif., says its mobile applications have been downloaded on more than 120 million devices, putting its services in easy reach of consumers even as they browse the aisle of brick-and-mortar stores.

“Mobile is quickly becoming the new normal, and we are leading this new way consumers shop and pay,” eBay’s chief executive, John Donahoe, told investors in a conference call on Wednesday. He predicted that PayPal and eBay’s marketplaces division, where most of eBay’s shopping activity occurs, will each process more than $20 billion in mobile transactions this year.

EBay does not keep all the revenue that passes through its services. PayPal charges merchants a fee to deliver payments from customers, and eBay collects fees for products listed and sold online.

The strides that eBay has made in the mobile market have impressed investors, helping propel its stock price to a 68 percent gain last year.

Its stock rose 40 cents, to $53.30 a share, after-hours trading Wednesday. The market’s reaction was tempered by a management forecast for the current quarter that was slightly below analysts’ expectations.

EBay earned $751 million, or 57 cents a share, during the final three months of last year. That is a 62 percent decrease from net income of $2 billion, or $1.51 a share, for the comparable period in 2011.

The 2011 numbers were inflated by a windfall from eBay’s $8.5 billion sale of the online calling service Skype to Microsoft.

If not for certain one-time items, eBay said it would have earned 70 cents a share. That figure was a penny above the average forecast among analysts surveyed by FactSet. The most recent quarter’s earnings were up 17 percent from 2011 on an adjusted basis.

Revenue rose 18 percent from the previous year to nearly $4 billion, in line with what analysts forecast.

As has been the case for some time, PayPal generated the greatest growth. Fourth-quarter revenue from the payment service totaled $1.54 billion, a 24 percent increase from the previous year.

PayPal, which eBay bought a decade ago, added five million users in the fourth quarter, its biggest three-month gain in eight years. The service now has about 123 million users, many of whom contributed to the roughly 700 million payments processed by PayPal in the fourth quarter.

EBay is now trying to extend PayPal’s reach offline. The company has already struck agreements with 23 retailers. Beginning this spring, PayPal will also be accepted at retailers that take the Discover card.

Article source: http://www.nytimes.com/2013/01/17/business/ebay-tops-forecasts-on-holiday-sales.html?partner=rss&emc=rss