EBay beat expectations for quarterly profit last night but gave a weaker-than-expected forecast for the current quarter, sending its shares down nearly 6 per cent.
Some on Wall Street question how eBay will generate growth, given curtailed consumer spending and pressure from a host of competitors. The company has increased its emphasis on fixed-price goods instead of auctions, making it more of a direct rival to Amazon.com, which many view as the stronger firm.
The global spending slowdown has hurt eBay's ability to attract buyers to its auction sites and the stronger US dollar also crimped profit from its overseas operations.
"Clearly we've been operating in an almost unprecedented external environment," Chief Executive John Donahoe told analysts.
Analysts said the company's first-quarter view, which came in well below Wall Street estimates, was a bleak sign, particularly as the company gave no forecast for the full year.
Jeffrey Lindsay of Bernstein Research called it "a pessimistic guidance for 2009." "The real story is they are guiding down a lot," he said.
Net profit in the fourth quarter, usually eBay's strongest because of holiday sales, fell to $367 million, or 29 cents per share, from $531 million, or 39 cents per share, a year earlier.
Excluding charges from a 10 per cent staff reduction last fall and other restructuring efforts, earnings per share came to 41 cents.
Total revenue fell 7 per cent to $2.04 billion, below the $2.11 billion expected by Wall Street. The bulk of that was due to a 16 per cent drop at its main business, which largely consists of its auction sites.
Revenue rose 26 per cent at Web-based telephone company Skype and 11 per cent at Web payments service PayPal.
Mr Donahoe told Reuters the company had no plans to spin off those businesses. Asked about that possibility during the call, Mr Donahoe said being part of eBay was not a constraint to PayPal's growth.
He called Skype a "stand-alone business" with minimal crossover with eBay's other divisions, but added: "We are going to continue to run and operate the business. It's not a distraction currently."
Reuters