The market’s expectations for Ebay were modest. Its second quarter was expected to be worse than last year. Wall St. estimates were for $.36 EPS on revenue of just a tick under $2 billion.
Ebay revenue came in a bit better than expected at $2.1 billion. EPS was $.25. The most disappointing aspect of the report was that GAAP operating margin decreased to 19.6% for the quarter, compared to 24.8% for the same period last year. Ebay shares dropped 3% just after the news was released, but were up 2% shortly thereafter.PayPal was once again Ebay’s star operation. The Payments business unit reported a strong quarter with $669.3 million in revenue, an increase of 11% year-over-year. Active registered accounts reached 75.4 million, an increase of 20% year-over-year.
The company’s core auction business continued to do poorly. The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, recorded $1.26 billion in revenue, a 14% year-over-year decline. Ebay blamed the results on a strong dollar and a bad economy.
Skype, the VoIP division which is likely to be spun-off soon, contributed $170.0 million in revenue for the quarter representing 25% year-over-year growth. Skype added 37.3 million registered users during the quarter and ended the period with more than 480.5 million registered users. The growth of this business has slowed considerably and it has clearly begun to mature.
Ebay gave lackluster guidance. In the third quarter, EBay said it expects net revenues of $2.05 billion to $2.15 billion with GAAP earnings per diluted share in the range of $0.22 to $0.24 and non-GAAP earnings per diluted share in the range of $0.34 to $0.36.
Douglas A. McIntyre
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