EBay Inc. (EBAY:US), operator of the world’s largest online marketplace, surged to an eight-year high after fourth-quarter revenue topped analysts’ estimates, helped by record holiday sales on the Web and mobile devices.
EBay rose 2.4 percent to $54.17 today in New York, the highest since Jan. 5, 2005. The company has soared 77 percent in the past year (EBAY:US), compared with a 15 percent increase for the Standard and Poor’s 500 Index in the same period. Sales climbed 18 percent to $3.99 billion, EBay said yesterday in a statement, exceeding the average estimate compiled by Bloomberg.
The results suggest Chief Executive Officer John Donahoe is sustaining a turnaround effort that began in March 2008, when he succeeded Meg Whitman. The company has been pushing to generate more revenue from consumers shopping on tablets and smartphones, and from retailers that use EBay to sell their merchandise. That has resulted in 14 straight quarters of sales growth, and a 75 percent rally in the shares since Donahoe took the helm.
“The legacy marketplaces business -- it’s kind of carried into mobile,” said Bill Smead, who helps oversee 340,378 EBay shares as chief investment officer of Seattle-based Smead Capital Management Inc. “You get involved with bidding or selling something on EBay, and it’s nice to carry around the device where you’re doing that with you.”
On Cyber Monday in November, at the beginning of last year’s holiday shopping season, transactions on EBay’s mobile applications more than doubled from the year before, while PayPal mobile-payment volume almost tripled. San Jose, California-based EBay charges a fee for each item sold, and for each PayPal transaction.
PayPal’s sales rose 24 percent to $1.54 billion, and active accounts increased 15 percent to 123 million. Revenue in the marketplaces division rose 16 percent to $2.05 billion, while the value of U.S. sales on EBay, excluding cars, trucks and other vehicles, rose 19 percent.
“U.S. sales volume not coming from EBay Motors is the metric everyone focuses on,” Gil Luria, an analyst at Wedbush Securities Inc., said in an interview. “It’s the best indication of the health of the core business in the U.S.”
Net income in the fourth quarter fell to $751 million, or 57 cents a share, from $1.98 billion, or $1.51 a share, a year earlier, when EBay sold the remainder of its stake in Skype to Microsoft. Profit before certain items was 70 cents a share, matching projections.
Donahoe said he’s continuing his efforts to make sure users are buying on smartphones and tablets as well as EBay’s website. Mobile users tend to complete purchases more often than those browsing on desktop computers, and mobile garners a quarter of new customers, drawing a younger demographic to the site, he said. EBay’s acquisition of credit-card scanning company Card.io last year (EBAY:US) will further that goal, because the technology makes it easier for new users to sign up, he said.
“Picture by the end of this year, you download the EBay or PayPal mobile app, you take a picture of your driver’s license, and you take a picture of your credit card, and that’s registering,” Donahoe said in an interview.
EBay’s mobile payment volume reached $13 billion last year, while PayPal’s total was $14 billion -- exceeding EBay’s own projections of $10 billion for each.
First-quarter revenue will be $3.65 billion to $3.75 billion, EBay said, compared with an average analyst projection of $3.8 billion. The company forecast profit, excluding some items, of 60 cents to 62 cents a share, versus a 64-cent estimate. EBay’s mobile payment volume will exceed $20 billion in 2013, as will PayPal’s, the company said.
After cutting about 3 percent of its workforce in October, PayPal hired three new vice presidents this week -- Arnold Goldberg from Box.net, Koby Avital from Microsoft Corp. (MSFT:US) and Ryan Granard from DreamWorks Animation SKG Inc. (DWA:US)
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