EBay profits jump but shares fail to catch up

EBay's first-quarter profit rose 11% as consumers spent more on its main website, but a disappointing forecast for the quarter pushed down the company's shares.

The internet shopping group said its first quarter revenue had risen 9% year on year to $2.2 billion (£1.42 million), matching analyst estimates. It earned $397.7 million (£257.5 million), or 30 cents a share, in the quarter, compared with $357.1 million (£231.3 million), in the period last year.

It reflected an improvement in eBay's biggest segment, which includes eBay.com and Shopping.com. The company has redesigned its main site's search and feedback in hopes of attracting and keeping more shoppers, and has started a buyer-protection scheme in the US and UK.

"We're making steady, solid progress," said eBay chief executive, John Donahoe.

Marketplace revenue rose 13% to $1.39 billion. Sales of fixed-price "Buy it Now" items and the acquisition of South Korea's Gmarket contributed to the jump in revenue, eBay said.

EBay said the number of active registered users on its site rose just 1% from last year to 89.5 million - but its gross merchandise volume, which counts the value of all the items sold on eBay, excluding vehicles, rose 24% to $13.4 billion (£8.68 billion).

RBC Capital Markets analyst Stephen Ju said he was satisfied with eBay's quarter, saying the company showed "incremental progress".

"It's always going to be slow progress to turn a large e-commerce property like eBay around," he said.

Revenue from eBay's payments business, which includes PayPal and a short-term credit service called Bill Me Later, jumped 26% to $809.3 million (£524 million). Total payment volume shot up 35% to $21.3 billion (£13.79 billion). Donahoe believes that in the next few years payment business revenue will surpass that of eBay's marketplace.

EBay forecast an adjusted profit between 37 and 39 cents a share for the quarter on revenue between $2.15 billion and $2.20 billion. Analysts expected 40 cents a share on revenue of $2.21 billion.

Chief financial officer, Bob Swan, said the company was expecting a stronger dollar to hurt its results, as transactions in other currencies translate into fewer dollars. The company kept its full-year forecast, which it issued when it gave its fourth-quarter report earlier this year.

EBay shares fell $2.12, or 8.1%, in after-hours trading, to $24.14. They finished regular trading at $26.29, down 11 cents.