eBay CFO Outlines Segment Margins

At a recent investor lunch, EBAY (EBAY) CFO Bob Swan commented on EBAY's long-term operating margin objectives and where actual segment margins stood in Q1 2008. In Marketplaces, the long-term margin objective is 35%-40% and the actual margin in Q1 held at 40%. In Payments, the long-term margin objective is 20%-25% and the actual margin in Q1 was 15%. In Communication, the long-term margin objective is 20%-25% and the actual margin in Q1 was closer to 11%.

The obvious takeway is that in both Payments and Communication, despite margins steadily increasing in recent quarters, there is still quite a bit of upside left. In Marketplaces, the objective is really to maintain the existing cost structure. With this in mind, I think EBAY's overall margin in the near-term will remain roughly flat. While the overall business mix will put pressure on margins, margin expansion at PayPal and Skype will partially offset this pressure.