Monday 24 July 2017

Ebay slips 5pc on missed quarterly earnings estimate

Ebay employs close to 2,000 people in Dublin, with some 500 employed directly and more than 1,300 staff at its subsidiary PayPal. Photo: Getty Images
Ebay employs close to 2,000 people in Dublin, with some 500 employed directly and more than 1,300 staff at its subsidiary PayPal. Photo: Getty Images
Peter Flanagan

Peter Flanagan

SHARES in online auction site Ebay, which has its European HQ in Dublin, fell over 5pc after quarterly earnings missed estimates.

Fourth-quarter revenue will be between $3.2bn (€2.3bn) and $3.35bn, the company said, with earnings per share expected to be in the range of 55c to 58c.

Ebay employs close to 2,000 people in Dublin, with some 500 employed directly and more than 1,300 staff at its subsidiary PayPal.

Chief executive John Donahoe is leading a turnaround of the e-commerce company, whose stock had plummeted 83pc in five years to a low of $10.27 in 2009. Ebay is spending to roll out new platforms and products and integrating acquisitions made in the past year to increase the use of its services across the web, moves that may weigh on earnings in coming quarters.

"Some of the acquisitions they made probably depressed margins a bit," said Colin Sebastian, an analyst in San Francisco. "It's a seasonally big holiday period, and given the macro backdrop, investors may have been expecting a little more upside in the quarter."

Third-quarter net profit was $490.5m, or 37c a share, compared with $431.9m, or 33c, a year earlier. Sales climbed a third to $2.97bn.

PayPal led growth in Q3 with revenue jumping 32pc to $1.11bn. PayPal's loss rate -- which measures how much the unit loses to payment fraud -- climbed to 0.31pc in the third quarter.

Donahoe said the increase was partly due to a jump in the volume of transactions processed by PayPal over mobile devices.

PayPal expects to process $3.5bn worth of mobile payments this year, up from $750m in 2010.

PayPal's fraud-monitoring computer models need time to adjust to this new source of transactions, the firm said.

Once the models have adjusted, PayPal's loss rate should decline, it added.

The firm has been one of the biggest employers in west Dublin since it set up there seven years ago. (Additional reporting Bloomberg/Reuters)

Irish Independent

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