eBay posts lower profit
The online auctioneer says first-quarter earnings declined 3 percent from a year earlier, shares fall.
By Jessica Seid, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - Online auctioneer eBay Inc. posted lower quarterly earnings Wednesday, sending shares down 5 percent in after-hours trading.

eBay (Research) reported that income for the first quarter fell to $248.3 million, due in part to the cost of employee stock options. That was down 3 percent from earnings of $256.3 million a year earlier.

Excluding one-time stock option expenses, profit was 24 cents a share, up from 20 cents a share earned in the same 2005 period and in line with estimates.

Revenue rose 35 percent to $1.39 billion from $1.03 billion, also in line with estimates.

The auctioneer said it expects revenue for the year to be between $5.7 billion and $5.9 billion. Wall Street analysts, on average, have been expecting full-year revenue of $6 billion.

eBay forecast second-quarter revenue to be between $1.37 billion and $1.42 billion, at the low end of the consensus forecast of $1.42 billion.

"Q1 results were in line with Street estimates, the Q2 forecast matched the existing Street consensus but management didn't adjust 2006 year-end guidance," said Derek Brown, an analyst with Pacific Growth Equities.

"The Street, for some time, has been running ahead of management's own forecasts," Brown said, which could result in a rather sizable shortfall between estimates and actual figures at the end of the fiscal year, he warned.

The number of registered users rose 31 percent to 192.9 million, said Meg Whitman, president and CEO of eBay.

New listings in the quarter reached a record 575.4 million, said Bob Swan, eBay's recently hired chief financial officer, in a conference call with analysts.

PayPal, eBay's online payments business, posted a 44 percent increase in revenue to $335.1 million.

Skype, eBay's recently acquired Internet telephone provider, posted revenue of $35.2 million. Whitman said Skype's revenue has risen 76 percent since it was acquired in September.

"eBay, PayPal and Skype are successful businesses on their own, and together they create additional opportunities for innovation and expansion," Whitman said.

Derek Brown does not own shares of eBay and Pacific Growth Equities does not have an investment banking relationship with the company.


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