The good news-bad news scenario continues for eBay Inc., as it heads into the final quarter of what has been a challenging year, at best.
eBay's profits rebounded into positive territory in the September quarter, but any celebration was quieted by the company's subsequent acknowledgement that the December quarter would be weaker, and so would results for the full year.
"The weak trends we saw in the second half of the third quarter have continued into Q4, and our guidance reflects the uncertainty in consumer global spending," eBay reports.
Just last week, eBay cut its headcount by 10 percent, and warned investors then to expect third-quarter results at the low end of previous estimates.
eBay released its third-quarter results Wednesday, posting net revenue of $2.1 billion and net income of $492 million, or 38 cents per diluted share.
In the plus column, registered users were up, listing volume was up and eBay's profits swung back into the red. Additionally, PayPal—which represents 28 percent of eBay's total revenue—posted 27 percent revenue growth for the quarter.
Despite these gains, however, eBay continued to see both its net revenue and gross merchandise volume slide. While net revenue of $2.1 billion was up 12 percent compared to a year ago, it was off 4 percent from the prior quarter. Moreover, net revenue for Marketplaces has consistently declined throughout 2008, and dipped another 6 percent in the third quarter. The Marketplaces division is comprised of eBay, Shopping.com, StubHub, Kijiji and other e-commerce sites owned by eBay.
Average selling prices on eBay have also declined each subsequent quarter, with the sharpest drop coming in the third quarter. Gross merchandise volume, at $14.28 billion, was down 9 percent from the June quarter, and was 1 percent off its year-ago level.
Still, the online auction giant has succeeded in steering more Marketplaces listings toward the fixed-price Buy It Now model it prefers. Fixed-price trading grew to 46 percent of gross merchandise volume, up from 43 percent in the prior quarter, and 41 percent a year ago.
"Overall, we are pleased with the performance of the portfolio this past quarter," says eBay President and CEO John Donahoe. "We took a number of steps during the quarter to further strengthen our business and better align our cost structure to invest and compete. We will continue to stay focused on connecting consumers on our various e-commerce platforms, maintaining financial discipline and capitalizing on new opportunities for growth."
To that end, eBay earlier this month acquired two Danish online classifieds businesses and payments service Bill Me Later for a total of $1.4 billion.
Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.
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