EBay Profit Declines Amid Strategic Review -- 2nd Update
January 28 2020 - 7:22PM
Dow Jones News
By Kimberly Chin
EBay Inc. reported a decline in profit on weak sales in the
latest quarter, amid a strategic review that led the online
marketplace to shake up its leadership ranks and sell off part of
its business.
Net revenue for the e-commerce giant fell 2% from a year ago to
$2.82 billion, marking the first year-over-year quarterly decline
since eBay spun out payments company PayPal Holdings Inc. in 2015.
Still, revenue pulled slightly ahead of analysts' estimates of
$2.81 billion.
The company also gave a weaker first-quarter revenue outlook,
anticipating $2.55 billion to $2.60 billion, below analysts'
estimates of $2.64 billion. Per-share earnings are projected to be
around 50 cents to 53 cents, and 70 cents to 73 cents on an
adjusted basis.
EBay said active buyers grew by 2% to about 183 million in the
December quarter, the eighth straight quarter of gains, though
gross merchandise volume, or the amount of business transacted on
its platforms, fell 5.4% from the comparable period a year earlier
to $23.3 million.
Its shares, which closed Tuesday at $36.21, fell 5.3% in
after-hours trading.
EBay has spent much of 2019 in an operations review after a
clash with activist investors over the company's strategic
focus.
Late last year, eBay agreed to sell its ticketing business
StubHub to Geneva-based Viagogo Entertainment Inc. for $4.05
billion. EBay has owned StubHub since 2007, when it bought the
business from StubHub co-founders Eric Baker and Jeff Fluhr for
$310 million.
EBay decided to explore selling StubHub shortly after two
activist investors surfaced last year and urged it to exit from
businesses unrelated to its core marketplace. The company agreed to
sell StubHub as well as its internationally focused
classified-advertising business. It also added board members as
part of a settlement with the investors, Elliott Management Corp.
and Starboard Value LP.
As part of its deal with the investors, eBay agreed to return
more money to shareholders, beginning with its first-ever dividend
payment last year. On Tuesday, the company bumped up its quarterly
cash dividend to shareholders by 14% to 16 cents a share. Ebay also
increased its current buyback program by $5 billion, adding to the
$2.2 billion it had already authorized. The company said it
repurchased about $1 billion in shares in the fourth quarter.
Scott Schenkel, who was eBay's finance chief, assumed the reins
of the company in September after Devin Wenig resigned over
conflicts with a reshaped board of directors.
EBay was founded in 1995 -- the same year that Amazon.com
launched as an online bookstore -- and became a success story
during the dot-com heyday. However, it has struggled to match
Amazon in recent years.
Overall, the e-commerce giant's fourth-quarter profit fell 27%
from a year earlier to $556 million, or 69 cents a share. On an
adjusted basis, profit was 81 cents a share. Analysts were
expecting adjusted per-share earnings of 76 cents.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
January 28, 2020 19:07 ET (00:07 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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