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Ebay Results Top Estimate; Boosts Outlook

Ebay Results Top Estimate; Boosts Outlook
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Online auctioneer eBay Inc. (EBAY: Quote) said Wednesday after the markets closed that its first quarter profit rose 20% from last year, helped by continued strong growth in its online marketplace and payments businesses. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. At the same time, the company raised its full year revenue and earnings outlook.

Ebay shares are currently gaining 7.39% in after hours trading after closing the day's regular trading session at $35.87, down 21 cents. The shares trade in a 52-week range of $26.86 to $38.18.

eBay benefited from growing demand for online merchandise. First quarter net revenues from the company's Marketplaces business, which consists of eBay, Shopping.com, StubHub, eBay Classifieds and other e-commerce sites, rose 11% to $1.73 billion, mainly due to increased buying and selling on the company's platforms and growth from acquisitions.

Gross merchandise volume excluding vehicles in the first quarter increased 12% year over year to $16 billion.

Revenues from the company's Payments business unit, which includes online payment service PayPal, and short-term credit service Bill Me Later, increased 32% from a year ago to $1.31 billion in the first quarter.

PayPal ended the quarter with 109.8 million active registered accounts, a 12% increase over last year. PayPal's net total payment volume (TPV) grew 24% to $34 billion in the first quarter.

Last month, PayPal unveiled PayPal Here, a global mobile payments solution that allows small businesses to accept almost any form of payment. The new service includes a free app and fully encrypted thumb-sized card reader, which turns any iPhone, and soon Android smartphone, into a mobile payment solution.

With PayPal Here, small businesses, service providers and casual sellers can send invoices or accept debit and credit cards, checks and PayPal using one simple product.

The GSI segment contributed net revenue of $237 million in the latest quarter. eBay completed the acquisition of GSI Commerce for nearly $2.4 billion in June last year.

For the first quarter ended March 31, 2012, the San Jose, California-based company reported net income of $570 million or $0.44 per share, compared to $476 million or $0.36 per share for the year-ago quarter.

Excluding items, adjusted net income for the first quarter was $725 million or $0.55 per share, compared to $619 million or $0.47 per share in the prior year quarter.

On average, 30 analysts polled by Thomson Reuters expected the company to earn $0.52 per share for the first quarter. Analysts' estimates typically exclude special items.

Operating margin for the quarter narrowed to 19.9% from 22.2% a year ago, while non-GAAP operating margin fell to 26.9% from 29.4% last year, mainly due to the impact of acquisitions and business mix. Net revenue for the quarter rose 29% to $3.28 billion from $2.55 billion in the same quarter last year. Twenty-nine analysts had a consensus revenue estimate of $3.15 billion for the first quarter.

For the first quarter, eBay's U.S. revenues grew 39% to $1.58 billion, while International revenues rose 21% to $1.70 billion.

ebay said it repurchased about $240 million of its common stock during the first quarter.

In August, eBay completed its acquisition of Zong, a provider of payments through mobile carrier billing, and Magento, Inc., the creator of open source ecommerce platform Magento. In December, eBay acquired BillSAFE, a provider of purchase-on-invoice technology in Germany. The acquisition extends the company's leadership in payments by combining BILLSAFE with eBay's PayPal. EBay is also reportedly looking at acquisition opportunities in Japan and China to expand in the Asian markets. With China having a significant internet penetration, the potential for growth is believed to be exponential. At present, the e-commerce business in China is dominated by Alibaba Group and E-Commerce China Dangdang Inc.

Looking forward to the second quarter, the company forecast net revenues of $3.25 billion to $3.35 billion, net earnings of $0.49 to $0.51 per share and adjusted earnings of $0.53 to $0.55 per share. Analysts currently expect the company to earn $0.54 per share on revenue of $3.36 billion for the second quarter.

For the full year 2012, eBay now expects net revenues of $13.80 billion to $14.10 billion, net earnings of $1.91 to $1.96 per share and adjusted earnings of $2.30 to $2.35 per share. Previously, the company expected net revenues of $13.70 billion to $14.00 billion, net earnings of $1.76 to $1.81 per share and adjusted earnings of $2.25 to $2.30 per share.

Analysts currently expect the company to earn $2.30 per share on revenue of $13.85 billion for the full year 2012.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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