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Cyber-punch-drunk eBay slashes revenue forecasts

Chief beanie on 2014: 'series of unanticipated setbacks'

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eBay continues to bear the scars from a cyber attack that led to the leakage of 145 million users data, as the footfall in its third party online tat bazaar came in below management expectations during calendar Q3.

President and CEO John Donahoe said the e-commerce platform has a runway to grow, “however, without a doubt, eBay is clearly facing some near-term challenges. Its growth is neither what we wanted or expected.”

The online tat bazaar grew revenues 12 per cent to $4.35bn, including six per cent climb in the Marketplaces platform to $2.15bn, sales in Payments up by a fifth to $1.95bn, and Enterprise up three per cent to $259m.

Some $63bn worth of trade was transacted on the e-commerce platform, up 27 per cent and net profit of $673m up two per cent

He said “slowing traffic” had delayed the “modest recovery” that execs forecasted for the second half of the year, and it is “aggressively managing costs” and “redeploying savings into marketing to drive traffic”.

“Following the cyber attack earlier this year, you recall that eBay made a bold decision to reset passwords for all users. We knew at the time that this was the right decision for our customers, but was likely to create some short-term challenges,” added the president.

The biz, which is facing multiple investigations over the breach, had some 800 million listings in the quarter.

CFO Bob Swain said on the call with analysts the post-cyber attack password reset is “causing friction with our users” and that some had endured the reset on multiple occasions.

“We are making adjustments to the login process and increasing customer service to address the pain points. We are also investing in marketing and contra expenses to increase the level of traffic that comes to the site”.

The eBay cause has hardly been helped by multiple embarrassing outages this year. Swan said that 2014 to date was a “challenging year with a series of unanticipated setbacks”.

The PayPal payment business has “good momentum”, stated the chief beanie, ahead of the separation due to take place in 2015.

In a sign that trade will be slower than initially hoped during the Christmas quarter, eBay pulled back Q4 sales forecasts to $4.85bn to $4.95bn, lower than the $5.2bn.

For the year, turnover is estimated to cross the finishing line at between $17.85bn and $17.95bn, down from previous guidance of $18bn to $18.3bn. ®

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