eBay halts nine months of revenue shrinkage

Profits? That's another matter

By Cade Metz in San Francisco • Get more from this author

Posted in Financial News, 21st October 2009 21:49 GMT

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eBay's revenues are on the rise again, thanks to the continued growth of its PayPal and Skype operations. But in the third quarter, the online tat house saw profits plummet nearly 30 per cent. The news sent its share price tumbling more than five per cent in after hours trading on Wednesday.

In the quarter ending September 30, eBay's revenues reached $2.23bn, a six per cent jump from the same quarter last year, ending nine months of revenue shrinkage. "Our third quarter results were strong with PayPal gaining momentum and market share worldwide and our core eBay business showing positive results," read a statement from chief executive John Donahoe.

The company's core marketplace business continues to shrink - revenues topped out a $1.4bn, down one per cent - but it's not shrinking as rapidly, and the slack was picked up elsewhere. PayPal revenue climbed 15 per cent to $688.1m, accounting for more than 30 per cent of eBay's overall business.

Revenue from the lame-duck Skype business was also up, climbing 29 per cent to $185.2m.

But third-quarter profits fell 29 per cent to $350m. eBay attributed the drop to its acquisition of instant-credit outfit Bill Me Later, the weaker US dollar, and its "continuing shift to faster growing, lower margin businesses."

Donohoe continues to move the company away from its traditional online auction biz towards fixed-price sales, classifieds, and the money machine that is PayPal. On November 3, eBay will open up a beta version of its new PayPal X platform, offering a new set of APIs for embedding payment tools into third-party applications. The idea is to put PayPal, well, everywhere. ®

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