Ebay sales and profits top forecasts

Ebay saw growth in its PayPal payment service again outstrip that of its core online auctions in a third quarter that beat Wall Street expectations.

The Silicon Valley company reported sales of $1.449bn and profits of $367m or 26 cents a share on a non-Gaap basis, compared with the analyst consensus of $1.426bn in sales and profits of 24 cents, gathered by Reuters Estimates.

Ebay shares, which had closed 1 per cent down in New York at $28.49, were up more than 6 per cent in early trading in New York on Thursday.

Meg Whitman, chief executive, said it had been a “very good quarter for the company and a continuation of the strong earnings growth we delivered throughout the first half”.

Ebay had reported problems in its core Marketplaces division – consisting of the Ebay auction site, Shopping.com and other classified websites – when it reported second-quarter results in July.

It said imbalances had emerged in the US where an abundance of listings of fixed-price stores had made its prices seem uncompetitive and diluted the experience of its auction site for users.

“The key focus remains reinvigorating our core US business,” Ms Whitman told analysts on Wednesday.

Ebay had taken action by increasing fees for store inventory listings and promoting its core auction listings more.

She said the moves were made late in the third quarter and there would be a better indication of their success or otherwise in the current quarter. But she said she was “cautiously optimistic”.

Ebay users generated a total of 584m new listings in the third quarter, including 95m new store inventory listings. This was 27 per cent higher than the 459m recorded a year earlier, which included 52m new store listings. Goods worth $12.6bn were sold, up 17 per cent from $10.8bn in the third quarter of 2005.

Ebay’s share of those sales was a record $1.049bn, up 22 per cent year-on-year. But this growth was exceeded by its PayPal payments service, with revenues up 41 per cent to $350m. The number of PayPal accounts also grew 41 per cent, from 87m to 123m.

Revenues for Skype, Ebay’s internet voice service, were $50m, up 13 per cent on the second quarter, and registered users rose 20 per cent on the previous quarter from 113m to 136m.