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October 21, 2010, 9:42 AM EDT
By Joseph Galante
(Updates with U.S. trading in first and fifth paragraphs.)
Oct. 21 (Bloomberg) -- EBay Inc., owner of the second-most visited e-commerce site, had its biggest gain in 15 months in Nasdaq trading after forecasting fourth-quarter sales and earnings that exceeded analysts? estimates.
Sales will be $2.39 billion to $2.49 billion this quarter, EBay said yesterday when it reported third-quarter results. Excluding stock-option costs and other expenses, profit will be 45 cents to 48 cents a share. Analysts in a Bloomberg survey had projected revenue of $2.41 billion and earnings of 44 cents.
Chief Executive Officer John Donahoe, halfway through a three-year campaign to revive growth, has cut listing fees to lure more sellers and taken steps to make EBay?s main Marketplaces commerce site easier to use. The company also is benefitting from more consumers making purchases online and using PayPal to handle payments.
?There is a lot of positivity here,? said Sandeep Aggarwal, an analyst at Caris & Co. in San Francisco. ?This is clearly an indication that the EBay turnaround is becoming more compelling.?
EBay rose $2.72, or 11 percent, to $28.38 at 9:39 a.m. New York time on the Nasdaq Stock Market, after climbing as high as $28.44 for its biggest intraday gain since July 2009. Before today, the stock had advanced 9.1 percent this year.
The company?s board also approved a $2 billion stock repurchase, following a $300 million buyback in the third quarter. The company has $6.1 billion in cash, with about $115 million in the U.S., Chief Financial Officer Bob Swan said on a conference call with analysts.
Boosted Forecast
Third-quarter profit was 40 cents a share, excluding some costs, compared with the 37 cents predicted by analysts. Sales increased less than 1 percent to $2.25 billion. Analysts had projected revenue of $2.18 billion.
Net income rose 24 percent to $431.9 million, or 33 cents a share, from $349.7 million, or 27 cents, a year earlier.
EBay also raised full-year forecasts. Profit excluding certain costs will be $1.67 to $1.70 a share, with sales of $9.05 billion to $9.15 billion. In July, EBay predicted earnings of as much as $1.65 and sales of up to $9 billion.
Retail spending in the U.S. will increase 2.3 percent to $447.1 billion in November and December, the best year-end in four years, according to the National Retail Federation.
?EBay?s core EBay.com website is one of the premier e- commerce properties in the world,? Fred Moran, an analyst at Benchmark Co., said in a note to investors this week. ?As e- commerce recovers, growth should accelerate on EBay?s marketplace.?
PayPal Gains
EBay also benefited from growing demand for its PayPal payment processing unit. Revenue from the division that includes PayPal rose 22 percent to $838.2 million. Total payment volume climbed 26 percent to $22.4 billion.
PayPal accounts for about 37 percent of EBay?s revenue and will eventually be larger than EBay?s e-commerce sites, Donahoe has said. PayPal is holding a conference next week to encourage developers to build systems that handle purchase and sales of so-called virtual goods.
?PayPal is in the best position of any payment solutions to become the de facto currency on the Web,? said Jordan Rohan, an analyst at Stifel Nicolaus & Co. in New York.
Since PayPal made its software more widely available last year, developers have generated more than $30 million in payment volume, Donahoe said in April.
?A Marathon?
PayPal, which estimates it controls about 10 percent of the online payments market, is likely to introduce a mobile version of its online checkout service for merchants by the end of the month, according to ThinkEquity LLC.
A big part of Donahoe?s effort to revive growth is making the main e-commerce site easier to access. Donahoe, who replaced Meg Whitman as CEO in March 2008, has enlisted engineers to overhaul 25 million lines of software code on EBay?s Marketplaces.
?We still have an enormous amount of work to do,? Donahoe said in an interview. ?Today was just another positive step forward in what?s a marathon.?
EBay is conducting an external search for an executive to replace Lorrie Norrington, who was in charge of Marketplaces since 2008. Under Norrington, who?s leaving for family reasons, EBay lowered listing fees for items and transitioned away from auction sales, which are losing popularity, to focus on fixed- price listings.
The changes have led to a surge in the number of products offered on the site, though revenue growth hasn?t kept pace. The conversion rate, or the number of visits that result in sales, at EBay sites declined 1.3 percentage points to 28.5 percent in the third quarter from the second quarter, according to Majestic Research LLC.
--Editors: Tom Giles, Nick Turner
To contact the reporters on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net
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(Updates with U.S. trading in first and fifth paragraphs.)
Oct. 21 (Bloomberg) -- EBay Inc., owner of the second-most visited e-commerce site, had its biggest gain in 15 months in Nasdaq trading after forecasting fourth-quarter sales and earnings that exceeded analysts? estimates.
Sales will be $2.39 billion to $2.49 billion this quarter, EBay said yesterday when it reported third-quarter results. Excluding stock-option costs and other expenses, profit will be 45 cents to 48 cents a share. Analysts in a Bloomberg survey had projected revenue of $2.41 billion and earnings of 44 cents.
Chief Executive Officer John Donahoe, halfway through a three-year campaign to revive growth, has cut listing fees to lure more sellers and taken steps to make EBay?s main Marketplaces commerce site easier to use. The company also is benefitting from more consumers making purchases online and using PayPal to handle payments.
?There is a lot of positivity here,? said Sandeep Aggarwal, an analyst at Caris & Co. in San Francisco. ?This is clearly an indication that the EBay turnaround is becoming more compelling.?
EBay rose $2.72, or 11 percent, to $28.38 at 9:39 a.m. New York time on the Nasdaq Stock Market, after climbing as high as $28.44 for its biggest intraday gain since July 2009. Before today, the stock had advanced 9.1 percent this year.
The company?s board also approved a $2 billion stock repurchase, following a $300 million buyback in the third quarter. The company has $6.1 billion in cash, with about $115 million in the U.S., Chief Financial Officer Bob Swan said on a conference call with analysts.
Boosted Forecast
Third-quarter profit was 40 cents a share, excluding some costs, compared with the 37 cents predicted by analysts. Sales increased less than 1 percent to $2.25 billion. Analysts had projected revenue of $2.18 billion.
Net income rose 24 percent to $431.9 million, or 33 cents a share, from $349.7 million, or 27 cents, a year earlier.
EBay also raised full-year forecasts. Profit excluding certain costs will be $1.67 to $1.70 a share, with sales of $9.05 billion to $9.15 billion. In July, EBay predicted earnings of as much as $1.65 and sales of up to $9 billion.
Retail spending in the U.S. will increase 2.3 percent to $447.1 billion in November and December, the best year-end in four years, according to the National Retail Federation.
?EBay?s core EBay.com website is one of the premier e- commerce properties in the world,? Fred Moran, an analyst at Benchmark Co., said in a note to investors this week. ?As e- commerce recovers, growth should accelerate on EBay?s marketplace.?
PayPal Gains
EBay also benefited from growing demand for its PayPal payment processing unit. Revenue from the division that includes PayPal rose 22 percent to $838.2 million. Total payment volume climbed 26 percent to $22.4 billion.
PayPal accounts for about 37 percent of EBay?s revenue and will eventually be larger than EBay?s e-commerce sites, Donahoe has said. PayPal is holding a conference next week to encourage developers to build systems that handle purchase and sales of so-called virtual goods.
?PayPal is in the best position of any payment solutions to become the de facto currency on the Web,? said Jordan Rohan, an analyst at Stifel Nicolaus & Co. in New York.
Since PayPal made its software more widely available last year, developers have generated more than $30 million in payment volume, Donahoe said in April.
?A Marathon?
PayPal, which estimates it controls about 10 percent of the online payments market, is likely to introduce a mobile version of its online checkout service for merchants by the end of the month, according to ThinkEquity LLC.
A big part of Donahoe?s effort to revive growth is making the main e-commerce site easier to access. Donahoe, who replaced Meg Whitman as CEO in March 2008, has enlisted engineers to overhaul 25 million lines of software code on EBay?s Marketplaces.
?We still have an enormous amount of work to do,? Donahoe said in an interview. ?Today was just another positive step forward in what?s a marathon.?
EBay is conducting an external search for an executive to replace Lorrie Norrington, who was in charge of Marketplaces since 2008. Under Norrington, who?s leaving for family reasons, EBay lowered listing fees for items and transitioned away from auction sales, which are losing popularity, to focus on fixed- price listings.
The changes have led to a surge in the number of products offered on the site, though revenue growth hasn?t kept pace. The conversion rate, or the number of visits that result in sales, at EBay sites declined 1.3 percentage points to 28.5 percent in the third quarter from the second quarter, according to Majestic Research LLC.
--Editors: Tom Giles, Nick Turner
To contact the reporters on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net
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