eBay records best year to date
EBay finished 2012 with a flourish as bargain-hunting festive shoppers flocked to its internet shopping mall and digital payment service to help lift the company's fourth-quarter earnings above analyst projections.
The results served as the exclamation point on the best year yet for eBay, an e-commerce pioneer founded in 1995 when the concept of buying merchandise online seemed absurd.
Online shopping has since become a staple for hordes of consumers, turning eBay into a thriving business and a Wall Street favourite.
But the growing popularity of smartphones and tablet computers is once again changing the way many people shop. EBay is trying to remain at the forefront of the shift by retooling its online bazaar and popular payment service, PayPal, to work better with mobile devices.
The company, based in San Jose, California, says its mobile applications have been downloaded on to more than 120 million devices, putting its services in easy reach of consumers even as they peruse the aisle of brick-and-mortar stores.
"Mobile is quickly becoming the new normal, and we are leading this new way consumers shop and pay," eBay chief executive John Donahoe told investors during a conference call. He predicted that PayPal and eBay's marketplaces division, where most of eBay's shopping activity occurs, will each process more than 20 billion dollars (£12.5 billion) in mobile transactions this year.
EBay does not keep all the revenue that passes through its services. PayPal charges merchants a fee to deliver payments from customers and eBay collects fees for products listed and sold online.
The strides that eBay has made in the mobile market have impressed investors, helping to propel the company's stock price to a 68% gain last year.
The company's fourth-quarter performance provided another boost as eBay stock edged up 40 cents to 53.30 dollars in Wednesday's after-hours trading. The market's reaction was tempered by a management forecast for the current quarter that was slightly below analysts' expectations. EBay earned 757 million dollars, or 57 cents per share, during the final three months of last year. That represented a 62% decrease from net income of two billion dollars, or 1.51 per share, at the same time in 2011. The 2011 numbers were inflated by a windfall from eBay's 8.5 billion-dollar sale of online communications service Skype to Microsoft.
For all of 2012, eBay earned 2.6 billion dollars, or 1.99 per share, on revenue of 14.1 billion. With the Skype sale, eBay earned 3.2 billion dollars, or 2.46 per share, in 2011. Revenue for that year totalled 11.7 billion dollars.