Ebay warns of weaker 2008 results

Ebay warned that results for the current quarter and year would fall below Wall Street expectations, spoiling strong 2007 year…

Ebay warned that results for the current quarter and year would fall below Wall Street expectations, spoiling strong 2007 year-end results and the planned departure of long-serving chief executive Meg Whitman.

Shares of the world's top auction and e-commerce company fell 7.5 per cent following the report, reversing a jump of as much as 10 percent on anticipation that a new chief executive could reinvigorate flagging growth in its auctions business.

For the current quarter ending in March, eBay said it expected revenue of $2.00 billion to $2.05 billion - well below Wall Street's average predication of $2.14 billion. First-quarter analyst forecasts had varied between $2.10 billion and $2.21 billion.

The San Jose, California-based company said it expected 2008 revenue of $8.50 billion to $8.75 billion, which at its midpoint represents growth of 12 per cent - far below the $9.02 billion or 18 per cent growth analysts had expected on average.

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The dour outlook came as eBay posted a 53 per cent surge in fourth-quarter net profit, comfortably ahead of forecasts.

Net income jumped to $531 million, or 39 cents per diluted share, from the year-earlier quarter's $346.5 million, or 25 cents per diluted share. Excluding one-time items, the latest quarter's profit was $611 million, or 45 cents a share.

Analysts were looking for a quarterly net profit, on average, of 33 cents per share. Excluding one-time items and stock-based compensation, the average Wall Street forecast was 41 cents per share.

Fourth-quarter net revenue rose 27 per cent to $2.18 billion, against an average forecast of $2.14 billion.

"The fourth quarter numbers were fine, but the guidance is pretty weak and obviously below the mean," said Martin Pyykkonen, an analyst with Global Crown Capital.

"(It's) hard to tell immediately how much of it is fundamental issues or (management) conservatism and how much of it is macroeconomics and related to retail spending."

Fourth-quarter growth was led by eBay's non-auction businesses, including its retail-like "fixed price" shopping sites; PayPal, which had revenue growth of 35 per cent; online ticketing site StubHub; Web-based phone company Skype; and classified ads and other advertising.

"We're very pleased with the results for the quarter which were strengthened by a solid holiday shopping season," Ms Whitman said in a statement.

The company said full-year 2008 net earnings, excluding one-time items and option expenses, are expected to range from $1.63 to $1.67 per diluted share - at or below the Wall Street average forecast of $1.67.

Net profit was expected to range from $1.27 to $1.31 per diluted share. Analysts were looking for an average net profit of $1.37 per share.

Cash, cash equivalents and investments leapt to $5.04 billion at the end of 2007 from $3.50 billion at the end of 2006, eBay said.

"We closed the year with a very strong balance sheet, giving us the financial flexibility to invest across all of our business units in order to extend our leadership positions," eBay chief financial Officer Bob Swan said in the report.