eBay Inc Q2 profit drops 29%

Online auction firm eBay Inc has reported a 29 per cent drop in net profit at $327 million in the second quarter ended June 30, mainly due to drop in sales of its marketplaces business.     

The company had a net profit of $460 million in the corresponding year ago period, eBay said in a statement.     

Net revenue declined four per cent to $2.09 billion in the latest quarter compared to $2.19 billion in the June quarter of 2008.     

The marketplaces business unit, which consists eBay, Shopping.Com, StubHub, Kijiji and other e-commerce sites, recorded revenue of $1.26 billion, a 14 per cent year-over-year decline.     

The revenue drop was attributable to the impact of the stronger dollar and the impact of challenging macroeconomic conditions, the statement added.     

"We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business," eBay Inc President and Chief Executive Officer John Donahoe said     

However, the year-over-year revenue growth of PayPal and Skype was offset by the effects of the stronger dollar and a modest decline in the marketplaces business, the statement said.

"We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I am pleased with our pace, our progress and our performance," Donahoe said.     

As of June 30, eBay's cash and cash equivalents totaled $2.57 billion compared to $3.19 billion at December 31, 2008.     

The Payments business unit reported a strong quarter with $669.3 million in revenue, an increase of 11 per cent year over year.     

Net total payment volume (TPV) for the quarter was $16.71 billion, an increase of 12 per cent. The revenue and TPV growth was driven by continued momentum in PayPal Merchant Services and the contribution made by Bill Me Later.     

In the outlook for the third quarter, eBay expects its net revenues to be in the range of $2.05 billion to $2.15 billion with GAAP earnings per diluted share in the range of $0.22 to $0.24.     

For the first half of 2009, eBay posted a net income of $684 million as compared to $920 million in the year earlier. Net revenues decreased to $4.11 billion in the six months ended June 30, 2009 from $4.38 billion in the last fiscal.