EBay holiday quarter outlook disappoints on U.S. weakness

Reuters/Mike BlakeAn Ebay logo is displayed on a monitor in this photo illustration in Encinitas

Reuters/Mike BlakeAn Ebay logo is displayed on a monitor in this photo illustration in Encinitas

EBay Inc on Wednesday gave a disappointing holiday forecast, saying the U.S. economic environment, including consumer confidence, had deteriorated in part because of the shutdown of the U.S. government.

Shares of the e-commerce company fell 5.7 percent in after-hours trading.

Chief Financial Officer Bob Swan told investors on a conference call that industry growth rates for e-commerce had shrunk to about 13 percent in the third quarter, from about 16 percent in the previous quarter.

“We really haven't seen any more positive signs in October,” he added.

Earlier in the day, U.S. Senate leaders announced a deal to reopen the government and avert a U.S. debt default.

But the deal would only fund the government until January 15, so Americans face the possibility of another government shutdown.

“We won't know until weeks from now, and I hope this deal sticks,” eBay Chief Executive John Donahoe said when asked if the end of the conflict would lift mood of shoppers.

Data firm ShopperTrak has forecast the slowest holiday sales growth since 2009, and last week, September retail sales showed U.S. shoppers were cautious, following a disappointing second quarter for many retailers.

U.S. consumer confidence slid last month to its lowest since May, according to a report released in late September by the Conference Board, an industry group.

EBay expects revenue of between $4.5 billion and $4.6 billion for the fourth quarter, ending December 31, compared with the $4.64 billion estimated by analysts, according to Thomson Reuters I/B/E/S.

Net income for its third quarter was $689 million, or 53 cents a share, up from $597 million, or 45 cents a share, a year earlier. Excluding the benefit of its sales of stakes in e-commerce companies RueLaLa and ShopRunner, eBay earned 64 cents, one cent better then expected. Revenue rose 14.3 percent to $3.89 billion.

For the holiday quarter, eBay expects a profit of 79 cents to 81 cents a share, while Wall Street analysts estimate 83 cents.

The company kept its full-year forecasts, but CFO Swan said revenue and profits are likely to come in at the low end of eBay's forecast.

PayPal, eBay's online payments division, reported that total payments volume rose 24.7 percent to $43.8 billion.

EBay lagged behind rival Amazon.com Inc for several years, but Donahoe has led a turnaround in recent years that focuses on mobile shoppers, international expansion and tie-ups with local physical stores. Amazon, whose shares fell 1.2 percent in after-hours trade on Wednesday, reports results next week.

EBay said that gross merchandise volume, or the dollar value of merchandise sold on its marketplaces, rose 12.7 percent to $18.4 billion in the United States, excluding auto sales.

EBay said the environment in Europe and Asia was mostly stable. In July, the company said Europe was weighing on its results.

The e-commerce company's third-quarter profit was boosted by its PayPal online payments business as consumers made greater use of its PayPal service.

This summer, eBay expanded its eBay Now same-day delivery service into new markets and last month bought payments gateway Braintree for about $800 million to strengthen PayPal's presence on mobile devices.

To compete with Amazon's Prime service, PayPal is offering for a limited time free two-day shipping for items paid for with that service.businessBusiness & Real EstateeBayPayPal

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

San Francisco police investigated the scene of a police shooting near Varney Place and Third Street on May 7. (Kevin N. Hume/S.F. Examiner)
SFPD shooting may prompt new body camera rules for plainclothes cops

Police chief says incident ‘should not have happened’

Governor Gavin Newsom speaks at a news conference about a $12 billion package bolstering the state’s response to the homelessness crisis at the Kearney Vista Apartments on May 11, 2021 in San Diego, California. (K.C. Alfred/The San Diego Union-Tribune/TNS)
Newsom promises sweeping change in California’s $267-billion budget

John Myers Los Angeles Times California would embark on the most ambitious… Continue reading

Despite the pandemic, San Francisco has ended the fiscal year with a budget surplus. (Kevin N. Hume/S.F. Examiner)
Better than expected tax revenues leave city with $157.3M surplus for this year

As the fiscal year nears an end and Mayor London Breed prepares… Continue reading

Passengers board a BART train bound for the San Francisco Airport at Powell Street station. (Kevin N. Hume/S.F. Examiner)
BART bumps up service restoration to August 30, offers fare discounts

Rail agency breaks pandemic ridership records, prepares to welcome more passengers

Ashley and Michelle Monterrosa hold a photo of their brother Sean Monterrosa, who was killed by a Vallejo police officer early Tuesday morning, as they are comforted at a memorial rally at the 24th Street Mission BART plaza on Friday, June 5, 2020. (Kevin N. Hume/S.F. Examiner)
State Department of Justice to investigate Sean Monterrosa shooting by Vallejo police

Attorney General Rob Bonta steps in after Solano County DA declines case

Most Read