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The Associated Press April 17, 2012, 12:01PM ET

Earnings Preview: EBay to post 1Q results

EBay Inc. is expected to report higher profit and revenue when it releases first-quarter earnings on Wednesday after the market closes, helped by the growth of its PayPal unit and in its e-commerce websites.

WHAT TO WATCH FOR: Investors will be looking for signs of growth in eBay's marketplaces unit, which includes and other e-commerce sites, and in PayPal, which processes payments on the Web and has expanded quickly in recent quarters.

PayPal has allowed eBay to grow beyond its namesake auction site and into online payments. As a next step, the company is working to expand into brick-and-mortar retailers. It recently launched a service that lets people use their PayPal accounts to pay for merchandise in Home Depot stores, a program that will likely expand to other large retailers.

In March, eBay unveiled a mobile payments service targeting merchants that don't already have full-fledged payments systems in place. Called PayPal Here, the service will let customers pay using credit cards, PayPal accounts or, in the U.S., checks. It rivals existing mobile payment services such as Square.

Though its U.S. business is solid, the lackluster economy in Europe will likely continue to weigh on eBay's business in the region.

WHY IT MATTERS: EBay is one of the world's largest e-commerce companies. The health of its core businesses gives an idea of how overall online commerce is faring.

WHAT'S EXPECTED: Analysts, on average, expect earnings of 52 cents per share on revenue of $3.15 billion, according to a poll by FactSet.

LAST YEAR'S QUARTER: EBay earned $475.9 million, or 36 cents per share in the first three months of 2011. Excluding special items, it earned 47 cents per share, a penny more than what analysts expected at the time. Revenue rose 16 percent to $2.5 billion.

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