Seeking Alpha
What is your profession? ×
Profile| Send Message|
( followers)

By Eric McWhinnie

eBay (eBay), which provides an online marketplace for the sale of goods and services, released its third quarter earnings after the closing bell on Wednesday [see transcript]. eBay also has an online payment unit that includes PayPal and Bill Me Later. The company was founded in 1995 and is based in San Jose, California.

eBay has beat EPS estimates for the past 5 years. Could eBay keep the streak going as it releases its third quarter numbers?

Earnings: eBay earned $432 million ( $.33 per share) in the third quarter. This is an increase from last year’s $350 million ($.27 per share) in the third quarter. Excluding one time items, eBay earned $.40 per share.

Revenue: Increased 1% to $2.25 billion. Analysts were expecting revenue of about $2.18 billion. eBay’s online payment unit, PayPal and Bill Me Later, reported a 22% increase in revenue from the year-ago period. Online payment unit revenue totaled $838 million for the third quarter. Marketplace revenue also rose to $1.41 billion (3% increase).

Actual versus Wall Street Expectations: Excluding one time items, eBay beat analysts estimates of .37 per share by 3 cents. The company also raised its full year guidance to $1.67-$1.70 per share, compared to earlier estimates of $1.60-$1.65 per share.

Notable Stats: At the end of the third quarter, PayPal had 90 million active accounts. A million new accounts were added each month of the third quarter. This helped eBay’s total online payment volume jump 26%. The Street seemed to enjoy the earnings release as shares rose over 7% in after-hours trading.

Did You Hear That? President and CEO John Donahoe had the following to say, “We delivered strong third quarter results, with great performance at PayPal and stable results at eBay. PayPal gained share globally and eBay continued to improve key metrics. Our company is strong and we are managing our global portfolio to balance strengths, challenges and opportunities, invest in growth and deliver consistent performance.”

Commentary: Investors should consider eBay as a company that can perform well in a strong and weak economy. eBay allows consumers to save money on an endless supply of items. Futhermore, eBay also provides consumers a way to pay for online purchases through PayPal.

Disclosure: No position.