Higher Expenses Weigh on eBay 2nd-Quarter Profit

EBay's revenue increased in the second quarter as its PayPal business and namesake online marketplace continued to grow. But net income fell amid higher expenses and its outlook for the current quarter was shy of Wall Street's expectations.
 
Shares of the e-commerce bellwether declined by about 6 percent, to $53.95, in after-hours trading Wednesday. Though he called the quarter's results strong, CEO John Donahoe said economic weakness in Europe and Korea will "continue to be a challenge" in the second half of the year.
 
EBay Inc. earned $640 million, or 49 cents per share, in the April-June period. That's down 8 percent from $692 million, or 53 cents per share, in the same months a year earlier.
 
Adjusted to exclude one-time items, per-share earnings rose to 63 cents from 56 cents and matched Wall Street's expectations.
 
Revenue grew by 14 percent, to $3.88 billion from $3.4 billion. Analysts polled by FactSet expected $3.89 billion.
 
Donahoe said eBay's core businesses _ PayPal and its e-commerce sites _ are going strong. PayPal added 4.7 million active registered accounts, ending the quarter with 132 million users.
 
EBay's operating expenses were $1.92 billion, up 12 percent from a year earlier.
 
For the current quarter, eBay is forecasting earnings of 49 cents to 51 cents per share and adjusted earnings of 61 cents to 63 cents per share. Analysts estimated higher adjusted earnings of 65 cents per share. EBay expects revenue of $3.85 billion to $3.95 billion, short of analysts' expectations of $3.97 billion.
 
EBay still expects adjusted earnings of $2.70 to $2.75 per share and revenue of $16 billion to $16.5 billion for the full year. Analysts forecast adjusted earnings of $2.75 per share on revenue of $16.31 billion.
 
The midpoint of San Jose, Calif.-based eBay's earnings outlook for the year is below analysts' average estimate.