EBay reports earnings slowdown

The average selling price fell 6 per cent in the second quarter, slowing growth in spending by online buyers. Gross merchandise volume, the value of all goods that users sold on EBay's sites, rose 8 per cent, EBay said yesterday in a statement, the smallest increase since the first quarter of 1999.

The decelerating sales growth underscored growing demand for discounts as higher food and gasoline prices eat into household budgets. Chief Executive Officer John Donahoe's strategy of removing most upfront fees boosted listings and encouraged bargain-hunting.

Consumers are "trading down to lower-priced items," particularly in the US and UK where economies are slumping, Chief Financial Officer Robert Swan said on a conference call. "We'll feel the effects of that until the economy rebounds."

The San Jose, California-based company said net income rose 22 per cent to $460.3 million, or 35 cents a share. EBay also said that Rajiv Dutta, who oversaw auction and retail sales, will retire in October and be replaced by Lorrie Norrington, his operating chief.

Profit excluding some items was 43 cents, beating analysts' estimates by 2 cents. Revenue in the three months ended June 30 rose 20 per cent to $2.2 billion from $1.83 billion, EBay said.

Full-year profit excluding items may rise to $1.72 to $1.77 a share, higher than it previously forecast, EBay said. Analysts surveyed by Bloomberg estimated $1.74.