eBay posts quarterly results that match Wall Street estimates but confirm fears that growth is slowing as the company hews to its conservative outlook.
SAN FRANCISCO (Reuters)—Web auction leader eBay Inc. Wednesday posted quarterly results that matched Wall Street estimates but confirmed fears that growth is slowing as the company hewed to its conservative outlook.
Executives said eBay was introducing its first-ever share buyback of up to $2 billion of stock over two years, even as they spelled out plans to increase the volume of sales in its core auction business by raising prices of some listings.
Shares of eBay, which have been on a relentless slide so far this year—plunging 41 percent—gained 3.8 percent to $26.93 in post-market trading following the report, as investors appeared to take heart from the share repurchase.
"We continue to grow faster than e-commerce in virtually all of our markets," President and Chief Executive Meg Whitman said in an interview.
"E-commerce is slowing down a bit. I think that with the changes we are making we can actually do better," she said.
Net profit for the second quarter dipped 14 percent to $250.0 million, or 17 cents per diluted share, compared with $291.6 million, or 21 cents a share, in the year-earlier quarter. The latest quarter's profit was in line with Wall Street expectations, according to Reuters Estimates.
Excluding one-time items and stock-based compensation expenses, the company reported a profit of 24 cents per diluted share. That also met the consensus profit forecast among Wall Street analysts, according to Reuters Estimates. Including these items, the average estimate was 17 cents a share.
Revenue rose 30 percent to $1.41 billion, squarely meeting the consensus analysts' view, according to Reuters Estimates.
"We were stronger in PayPal and Skype and Shopping.com and had slightly slower growth rates in our core (auction) business," Whitman said.
"We think it could be stronger," she told Reuters, speaking of the company's mainstay auction business.
San Jose, California-based eBay has been hit by changing dynamics in the online auction market, where growth is maturing and Web search and advertising—areas where it relies on partnerships—become ever more important in driving customers to auctions.
Whitman acknowledged it has become "a little bit harder to find items" when consumers search for items on its sometimes cluttered auction site. "I think that has caused the buyer experience to suffer," Whitman said.
eBay said 83 percent of all listings are now in what the company calls its store inventory format—items available for instant purchase, like on Amazon.com—overshadowing the company's classic auction bidding format.
The instant-purchase items take 40 times longer to sell and cost more to host online. In response, Bill Cobb, president of eBay North America, said in a message to eBay users sent Tuesday that eBay was raising sales fees on products listed in the instant purchase format that sell for $100 or under.
"GMV (gross merchandise volume) growth has not been as strong. We are going to take some steps to reinvigorate core listings that will de-emphasize 'store inventory format,"' Whitman said.
eBay shares have also faced downward pressure due to management changes and recent concerns that it faces mounting competition from Google Inc. in its PayPal business.
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