EBay outlook falls short, shares drop
Friday, 23 April 2010
SAN FRANCISCO, Apr 22 (Reuters): EBay Inc forecast results for the rest of the year that fell short of Wall Street expectations for a faster turnaround as the economy improves, sending its shares down more than 8 per cent.
EBay is in the second year of a 3-year restructuring designed to revive its marketplaces unit, whose growth has paled in comparison with that of its Web payments unit PayPal.
Measures to make the buying and selling marketplaces site more customer-friendly -- from lower upfront listing fees to better consumer service and a focus on "buy now" items -- has resulted in more buyers and more transactions.
But investor optimism over the pace of its turnaround has outpaced actual results.
BGC Partners analyst Colin Gillis called the second-quarter outlook "lackluster" and said eBay would have needed to raise its full-year forecast to keep investors bullish.
"The expectations for a monster quarter are not materialising," he said.
"It is a company that is still in turnaround," UBS analyst Brian Pitz said. "Given that e-commerce trends seem to be favourable, the Street probably was expecting more of a beat than they actually delivered."
EBay stood by its previous full-year earnings outlook for revenue of $8.8 billion to $9.1 billion and adjusted earnings of $1.63 to $1.68 per share. That compares with the average Wall Street view for revenue of $9.1 billion and EPS of $1.67.
EBay Chief Financial Officer Bob Swan said the company was not raising its full-year view because improved results would be offset by the negative effects of a stronger US dollar.
For the second quarter eBay estimated revenue of $2.15 billion to $2.2 billion and adjusted earnings of 37 cents to 39 cents per share.
EBay is in the second year of a 3-year restructuring designed to revive its marketplaces unit, whose growth has paled in comparison with that of its Web payments unit PayPal.
Measures to make the buying and selling marketplaces site more customer-friendly -- from lower upfront listing fees to better consumer service and a focus on "buy now" items -- has resulted in more buyers and more transactions.
But investor optimism over the pace of its turnaround has outpaced actual results.
BGC Partners analyst Colin Gillis called the second-quarter outlook "lackluster" and said eBay would have needed to raise its full-year forecast to keep investors bullish.
"The expectations for a monster quarter are not materialising," he said.
"It is a company that is still in turnaround," UBS analyst Brian Pitz said. "Given that e-commerce trends seem to be favourable, the Street probably was expecting more of a beat than they actually delivered."
EBay stood by its previous full-year earnings outlook for revenue of $8.8 billion to $9.1 billion and adjusted earnings of $1.63 to $1.68 per share. That compares with the average Wall Street view for revenue of $9.1 billion and EPS of $1.67.
EBay Chief Financial Officer Bob Swan said the company was not raising its full-year view because improved results would be offset by the negative effects of a stronger US dollar.
For the second quarter eBay estimated revenue of $2.15 billion to $2.2 billion and adjusted earnings of 37 cents to 39 cents per share.