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eBay defies 'softening' economy

Profits leap 22 per cent

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eBay says that a softening economy has slowed its online auctions on both sides of the Atlantic. But the company still made an awful lot of money during the year's first quarter. And it still has high hopes for the future.

"We are encouraged by what we are seeing," brand-spanking-new CEO John Donahoe told investors during a conference call. "With Q1 behind us, I feel very good about the direction we are headed."

During the quarter ending March 31 - the day Donahoe grabbed the reins from former CEO Meg Whitman - the world's most popular online auction house raked in revenues of $2.19bn, a 24 per cent increase from a year ago, while profits hit $460m, a 22 percent leap from the previous year.

This came despite what eBay called "softening" economies in the US and the UK. "We saw a slowing in terms of buyers' propensity to buy toward the end of the first quarter," Chief Financial Officer Bob Swan said during the call. The US is eBay's number one market, while Britain is number three (just behind Germany).

But eBay cleaned up in other parts of the world, benefiting from a weak American dollar. Fifty-five per cent of the company's "marketplace" revenue - cash generated from auctions on eBay.com, Shopping.com, StubHub, Kijiji, and other sites - came from outside the US.

The number of eBay users increased only 1 per cent from the previous year, while gross merchandising volume (GMV) - the sum value of all closed auctions - decreased one per cent. But the number of auction listings rose 10 per cent.

eBay was pleased enough with the quarter to raise its forecast for the coming year. The company now expects 2008 revenues to reach somewhere between $8.7bn and $9bn. ®

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