eBay Q3: Earnings Not Too Shabby, Outlook Tentative

eBay’s (EBAY) third quarter results weren’t too shabby, but the company’s outlook disappointed some on Wall Street. In addition, the company said it was “cautiously optimistic” heading into the holiday season.

The company reported net income of $349.7 million, or 27 cents a share. Non-GAAP earnings were $501.5 million, or 38 cents a share, a penny better than Wall Street estimates. Revenue for the quarter ending Sept. 30 was $2.2 billion, up slightly from a year ago.

However, there were a few disappointing items in eBay’s report. Operating margin fell to 19.8 percent in the quarter, down from 24.7 percent a year ago. The margin decline was largely attributed to eBay’s Bill Me Later unit and a weaker U.S. dollar. Bill Me Later had a net charge-off rate of 11.5 percent as bankruptcy and credit write-offs increased.

The outlook was roughly on par with estimates. For the fourth quarter, eBay projected earnings of 28 cents a share to 30 cents a share. On a non-GAAP basis eBay projected earnings of 38 cents a share to 40 cents a share. Wall Street was expecting 40 cents a share. Revenue will be between $2.2 billion and $2.3 billion. The projections don’t include the pending sale of Skype, which will give eBay a gain of about $1 billion.

By the charts:

Here’s eBay’s payment statistics:

And marketplace data:

Comments

[Patricia013:]

Forget the BUTS and look at the facts:

Last quarter 2008 – decline
First quarter 2009 – decline
Second quarter 2009 – decline
Third quarter 2009 – decline

Do you see a pattern here? I sure do. Name of the game is revnue and Ebay’s has been declining for over a year now. If Donahoe doesn’t either get out or get over himself and his disruptive innovation he won’t have any company left! The coming holiday season should be the knockout punch.

As an 11 year seller on Ebay I have never ever seen such a downturn in traffic and sales and everyone is saying the same thing! We've been saying for a year and a half now that Donahoe is on the wrong path and the only ones who seem to see this are the people who actually use that site on a day to day basis. The rest of you folks seem blind or oblivious to the fact that this company is suffering a slow death from the inside out - all due to Donahoe's insistance on turning it into a cheesy and mediochre version of Amazon!

Oct 21 05:13 PM

[User 283977:]

From Ebay's report:
Compared to third quarter 2008, net revenues are up 6%. However net earnings per diluted share (GAAP) are down 29%. Non-GAAP earnings per diluted share are down 16%. I think those numbers provide an accurate assessment of managements performance without recourse to embellishments.

finance.yahoo.com/news...

I can't wait to see how management interprets fourth quarter results which will contain revenues from the sale of Skype.

Oct 21 06:04 PM

[ebay_flyer:]

"EBay’s (EBAY) third quarter results weren’t too shabby"
Larry Dignan seekingalpha.com/autho...

The imaginative canned releases of Ebay Marketing and Public Relations makes articles like Mr. Dignan's possible.

Try reality.

There is a dump in progress.

Ebay down -4.59%
Volume: 40,674,140
Average Volume: 17,777,200

After The Bell - eBay shares down
www.reuters.com/articl...

EBay holiday outlook disappoints, shares drop
www.reuters.com/articl...

Ebay Profit Forecast Misses Some Analysts' Estimates
www.bloomberg.com/apps...

eBay's Outlook: Bah-Humbug
www.thestreet.com/_yah...

Ebay's Profit Falls 29% on Lower Margins
online.wsj.com/article...

Revenue Rose but Income Fell in Quarter at eBay
www.nytimes.com/2009/1...

eBay Guidance Poses Performance & Valuation Questions
247wallst.com/2009/10/.../

Oct 21 06:10 PM

[eBay +++:]

12.2B in GMV for Marketplaces excluding Vehicles, a 7% Y/Y gain, impressive.
A little profit taking and the fact the guidance was as usual “cautiously optimistic” Stocks down a mere 4% in after hours. They'll make that up over Q4 and more. I expect a solid Q4 based on today.

-29% was due to BIll Me Later and Exchange Rate. Had nothing to due with performance. If you suggest anything else you didn't do your homework, but we have a lot of people like that here. LOL.

Oct 21 06:58 PM

[Patricia013:]

Do you Ebay excuse-makers realize this company has been declining for the past 1 1/2 years? All the while making meager gains here and there that analysts hold up as "turning around" while its core continues to decline. During this same time Amazon, a company excellently run, is beating the heck out of Ebay - massive gains quarter after quarter - with no excuses needed! Get real people. John Donahoe overstepped the realm of what was possible for Ebay to achieve - especially with him at the helm. His disruptive innovation fell flat right from the start! Right now he's blowing smoke up your skirts - why? Because after all this time and all the possible real revenue Ebay lost...how can he admit he's wrong? This is becoming a sad sad joke! Chew on that!

Oct 21 07:11 PM

[eBay +++:]

Amazon has never done 12.2B in GMV and that's excluding Vehicles. Sorry but it's NOT EVEN CLOSE, let's see what they do when their as big as eBay is.
eBay is much more saturated the Amazon, yes. eBay had the growth Amazon is now experiencing 5 yrs ago. Let's see how fast Amazon grows when the reach 12.2B in GMV....

Oct 21 07:26 PM

[Bob C:]

"Oh and eBay stock is up yet again. 30 after earnings? Maybe.... " quote by eBay+++ on his Oct. 8, 09 post...(check his comments to verify)

Oct. 21, after hours, eBay is at $23.90 and falling :)
ROFLMAO!!!!

You got to know when to fold 'em!!!

Oct 21 08:38 PM

[eBay +++:]

Oh Bob please, I said "maybe...". You even posted it above. I know your a senile old man, but please read carefully. Seems it will take a little more time, but that was not a surprise for me.

Oct 21 08:55 PM

[NYM Arts:]

DONALD YACKTMAN of Yacktman Asset Management got it Right On the Money :
"You like management to slim the business down to its Most PROFITABLE CORE and Grow the Core, and Not "DEWORSIFY"...if they're gonna make acquisitions, they ought to be Synergistic and (Ebay) should NOT OVER PAY. And I think on Both Counts there have been some Questionable decisions on the part of Ebay."
When Don said "De-Worse-ify" He Meant what he said.
THANK YOU DON !
We Love you Sweetheart. You're a Good Man !
So, When are you taking over Ebay Don ?
Can I be your assistant in Growing the Core ?
I have SUCH a green thumb :o)
View Don's latest interview on YouTube...just punch in Yacktman.

Oct 21 10:49 PM

[PastTense:]

"Bill Me later had a net charge-off rate of 11.5 percent as bankruptcy and credit write-offs increased."

If eBay's management weren't incompetent, they wouldn't be offering something with this kind of charge-off rate.

Oct 21 11:58 PM

[bottoms-up:]

eBay are a bunch of idiots!

As an end user I bid and one on many things for several years, then I moved. Over and over their system would not let me change the address because it was "not the same address on file with the U.S. Postal Service."

I wrote to them (almost impossible to get to the point where you can get support) then I received a reply from AUSTRALIA that had nothing to do with the problem.

As an end user and a client who has canceled their account, I think they have a cut-off the nose mentality.

Oct 22 08:21 AM

[longoil:]

The problem is brand association. EBay has not caught on yet. The eBay name is associated with hobby items, collectibles, junk jewelry and other second hand items. They are trying to enter an area that they have weak traction in (i.e. books, DVDs, etc.) and where Amazon leads the industry and has superior customer service.

This is like MacDonald's announcing that they will be open up high end steak houses and expect to succeed because of their extensive franchise network and experience in the food industry. Just like the name MacDonald's is associated with junk food, eBay is similarly associated with second hand merchandise and dismissal customer service.

Oct 22 08:36 AM

[Bob C:]

On Oct 21 08:55 PM eBay +++ wrote:
> Oh Bob please, I said "maybe...". You even posted it above. I know
> your a senile old man, but please read carefully. Seems it will take
> a little more time, but that was not a surprise for me.

Well heck, if "maybe" qualifies our statements, then I predict shares back to $10.
"Maybe" before this day is over :)

Am I senile? "Maybe"
Am I stupid? I don't think so!

Oct 22 09:59 AM

[Leftfield:]

Laugh of the day: Longoil says about Donohoe's policies: "This is like McDonald's announcing they will be opening high end steak houses." You know, "The Ebay name is associated with hobby items, collectibles, junk jewelry and second hand items."
Are these first declines ever when Ebay would have been a lifeline to small sellers and buyers but for delusional stupidity on the part of Donohoe, green shoots?

Oct 22 10:54 AM

[NYM Arts:]

FRANKFURT, Oct 22 (Reuters) - Shares in eBay Inc (EBAY.O) fell in Frankfurt trading on Thursday after the company forecast results for the fourth-quarter at the low end of Wall Street estimates.

By 0723 GMT, shares in the company dropped 6.2 percent in Frankfurt (EBAY.F), while the DJ STOXX European Tech Index .SX8P was down 2.2 percent.

Oct 22 10:58 AM

[Philip Cohen:]

Let's just accept eBay+++ as the resident eBay stooge and simply ignore him. What else do you expect a (probably paid) eBay appologist to be saying? Those of us who actually watch the activity on eBay know what is happening. I am only surprised the downturn in the marketplaces was not more obviously expressed in the financial statements; but I guess that's "accounting" for you ...

Oct 23 01:53 AM

[Patricia013:]

So - the truth has unfolded with the current quarterly reports - Ebay: Net profit down 29 percent. Amazon sales up 28 percent! Profits up 68 percent. Their stock is going up and out of sight.

So what does Donahoe say to that? Well, he'll just have to destroy core even faster! Can anyone understand this reasoning? Hurry up and bring in more of exactly why Ebay can't make sales these days...bring in MORE of it! Well, Mr. Donahoe when ALL the small sellers are gone - what will your excuse be then? You won't have the small sellers to beat up and blame for YOUR failures and with Amazon's steel hard success you sure won't be able to blame your failures on the recession either! In fact, without Paypal and Skype Ebay's flaws would show undeniably - I await that day!

Oct 23 04:30 PM