By Chris Maxcer E-Commerce Times
04/19/07 2:15 PM PT
eBay on Wednesday reported a 52 percent jump in Q1 profits, in part credited to increased seller fees, while the online auction house's total listing and users changed little. eBay's Skype and PayPal possessions raked in significantly increased earnings as well, though neither appear to be growing as much as the company had hoped.
Internet auction house eBay (Nasdaq: EBAY) on Wednesday beat Wall Street estimates by delivering US$377.2 million in earnings for the first quarter of this year, a massive 52 percent leap.
Despite the strong performance, eBay shares struggled Thursday, falling around 85 cents, or 2.5 percent.
The online auction house showed relatively little growth in its total number of sales listings, and it did not significantly increase its user count. The company listed 588 million items last quarter, which is only 2 percent over the same quarter in 2006.
eBay has been working to reduce the number of overpriced items as well as purge the number of repeat items listed by sellers. To do this, the company increased seller fees to discourage repeat items and encourage lower starting bids, which resulted in additional revenue.
PayPal and Skype
eBay properties PayPal and Skype both made solid gains for the quarter, with PayPal earning $439 million in revenue, a 31 percent increase, and Skype taking $79 million, a whopping 123 percent increase. While both businesses saw growth, they also point to potential trouble spots.
PayPal faces upstart competition from Google's (Nasdaq: GOOG) Checkout service, and while Skype is growing, it still represents a fraction of eBay's profit.
"With Skype, eBay hoped that if they distributed Skype on eBay, it would facilitate online transactions, that users would call up vendors or sellers and that would, in turn, drive sales," Karsten Weide, IDC program director of digital media and entertainment, told E-Commerce Times. "And it hasn't really paid off that well. ... Skype wasn't such a natural fit for eBay."
While PayPal is a more natural fit, Weide added that even it wasn't growing as fast eBay had hoped. He also noted that Google's Checkout, while being a competitor, will not likely dethrone PayPal any time soon.
'Original Social Networking Site'
In addition, while eBay CEO Meg Whitman said, "We were the original social networking site," during Wednesday's financial report, the company falls short of competing with Web 2.0 social networking sites like MySpace or FaceBook. That, however, might point to opportunities.
"Social networking is a good fit for eBay, and they don't have that yet," Weide said. "A natural fit for eBay is to have a social network where customers can exchange product information, find out which products are good, get tips and tricks, learn about vendors on eBay, their return policies, how trustworthy they are and all of that."
eBay features user ratings and comments; however, they tend to appear cursory rather than truly informative.
"In general, for eBay in the consumer-to-consumer space -- and for Amazon.com (Nasdaq: AMZN) in the business-to-consumer space -- there's not really a serious challenger in sight," Weide said. "eBay doesn't have to be afraid, but that said, in the digital marketplace, things can change quickly and totally turn upside-down. So eBay must remain on its guard."
Yahoo Shares Slide on Dismal Q1 Results April 18, 2007
Yahoo's Q1 report showed 11 percent less in net earnings than last year's first quarter. Panama, Yahoo's new online advertising system, has yet to prove its usefulness, and the company has formally told investors not to expect results from Panama until later in the year. However, that stance doesn't appear to mesh with CEO Terry Semel's enthusiastic cheerleading.
Related Stories
Cable TV Group Rejects eBay Ad Exchange Program April 06, 2007
The Cabletelevision Advertising Bureau said it would pull out of an online ad exchange program proposed by auction firm eBay, explaining it is the "best decision for the industry and its advertisers." eBay's test product, dubbed "Media Exchange," was cited by the CAB as having several shortcomings.
NetSuite Launches New E-Commerce Suite February 16, 2007
The new features included in NetSuite's e-commerce on-demand business management suite enable mid-sized companies to efficiently automate e-commerce operations and avoid the cost and hassles of developing complex custom applications. These features include multi-channel, multi-store, multi-currency and multi-language support, as well as automated Amazon.com-like upsell/cross-sell capabilities.
Related News Alerts
More by Chris Maxcer
Clicker Cuts Through Web Video Chaos November 23, 2009
Clicker is a new Web site that makes it easier to find the full-length, broadcast-quality TV shows and movies available around the Web via streaming. The interface is clean and easy to use, and if you sign up for a free account, you'll be able to make playlists of shows you'd like to follow. Most of Clicker's shortcomings are really due to the byzantine rights arrangements surrounding online show distribution.
The Gphone That Could Catch My Eye November 20, 2009
Rumors are cropping up that Google is preparing to sell its own Gphone -- an Android handset using Google-branded hardware. There are some reasons to doubt it will happen, of course, but the possibility is intriguing. What would Google have to build to make something worthy of an iPhone fan's attention?
Apple's House Rules Won't Be the Death of App Development November 13, 2009
Facebook's iPhone app is one of the most popular wares the App Store has ever carried. But its developer, Joe Hewitt, says he's through with it, stating that Apple's review policies are starting a bad precedent for other platforms. However, good apps from talented developers will always find platforms, and Apple's policies won't prevent that from happening. They may even help.
Headline Feeds
listings, and it did not significantly increase its user count. The company listed 588 million items last quarter, which is only 2 percent over the same quarter in 2006.
Talkback: 
