EBay 3rd-qtr net income drops though revenue rose on PayPal payments service growth

EBay 3Q net income down 29 pct though revenue rose

SAN FRANCISCO — EBay Inc. said Tuesday that even as third-quarter net income dipped 29 percent, its revenue rose largely because more people and merchants are using PayPal to pay for things online.

The San Jose-based company said the number of active PayPal accounts rose 19 percent to 78 million compared with a year earlier. That contributed to a 15 percent revenue jump to $688.1 million in its payments business — which includes PayPal and short-term credit service Bill Me Later.

But eBay’s core marketplaces business, which includes the main eBay site and other sites like Shopping.com, saw revenue dip 1 percent to $1.4 billion.

Although the company attributed this decline partly to unfavorable foreign exchange differences, the decline in marketplaces may indicate that efforts to revitalize eBay’s main site still haven’t gained enough traction among bargain-hungry shoppers, or that shoppers have simply continued to rein in their spending due to the still-weak economy.

The online marketplace operator’s third-quarter net income fell partly because operating expenses climbed. EBay earned $350 million, or 27 cents per share, compared with net income of $492 million, or 38 cents per share, in the year-ago quarter.

Revenue rose 6 percent to $2.24 billion.

Shares in eBay, which also forecast third-quarter results in line with analyst estimates, fell $1.31, or 5.2 percent, in after-hours trading. The shares had finished regular trading down 3 cents at $25.03.

EBay said that the number of active users on its marketplace rose 2 percent to 89.2 million, showing that it is continuing to attract new buyers and sellers.

Its gross merchandise volume, which is a metric that indicates the value of all the items sold on eBay, excluding vehicles, rose too, gaining 7 percent to $12.2 billion.

Revenue from Internet communications service Skype, which is eBay’s smallest business, increased 29 percent to $185.2 million.

EBay is planning to sell the majority of Skype to a group of private investment funds for $1.9 billion in cash and $125 million to be paid later. The company plans to keep the other 35 percent.

The deal may be complicated by ongoing litigation with Skype’s founders, though, as they have filed a copyright-infringement suit against eBay and Skype alleging Skype violated an agreement over the use of technology that Skype licenses from another company founded by Skype’s creators.

For the quarter that ends in December, eBay expects earnings of 28 cents to 30 cents per share, or 38 cents to 40 cents per share when excluding one-time items. The company expects revenue of $2.2 billion to $2.3 billion.

Analysts are looking for adjusted earnings of 40 cents per share on $2.26 billion in revenue.