eBay (Nasdaq: EBAY) 
turned in more than respectable earnings for its second quarter: a 22 percent rise in profits for a net income of US$460 million, or 43 cents a share. Yet the online auctioneer's stock value dropped following the news, in part because of its disappointing guidance for the third quarter.
After the earnings announcement, shares fell $1.86 to $26.24.
By mid-afternoon on Thursday, they had tumbled $4.18 to $23.52, then recovered slightly to close at $24.20.
eBay issued cautious guidance for the third quarter, Frederic Ruffy, the senior options strategist at WhatsTrading.com, a New York City-based provider of options market analysis, told the E-Commerce Times.
Its outlook calls for adjusted earnings of $1.72 to $1.77 a share for the rest of the year. After taking into account the Q2 gains, those numbers are basically unchanged from the company's forecast three months ago.
Little Good News
It is ironic that eBay's shares are under pressure, as the 43 cents a share return beat analyst expectations by two cents. Still, investors found ample cause for disappointment. Revenues rose 20 percent over last year -- the slowest pace in the company's history, Ruffy noted.
"The growth came from Skype (51 percent) and PayPal (33 percent). Its eBay Marketplaces business unit, which includes e-commerce sites and eBay.com, saw a relatively disappointing 13 percent increase in revenue," he said.
The marketplace business accounts for 66 percent of revenue, compared with 27 percent for PayPal and 6 percent for Skype, Ruffy explained.
Aware that its core marketplace unit needs bolstering, eBay has reshuffled management there: Rajiv Dutta, who was named president of eBay Marketplaces earlier this year, has been replaced by Lorrie Norrington, most recently president of eBay Marketplaces Operations. She will report to John Donahoe, who took the helm as eBay CEO in March.
"Some of the second quarter earnings surprise was due to favorable tax rates," Ruffy pointed out. "eBay had a 22 percent tax rate in the quarter, compared to 25 percent in the previous quarter."
Bright Spots
There is some good news to be gleaned from the earnings, Peter Cohan of Peter S. Cohan & Associates, told the E-Commerce Times. "The revenues from PayPal, for example, are notably positive. PayPal is an underappreciated asset, and it will continue to serve eBay well going forward."
Also, the market may be pleasantly surprised by eBay's performance 
over the next quarter, despite -- or perhaps because of -- the lowered guidance.
In general, tech companies with international exposure are positioned to do well, or at least better than their domestic-only counterparts, Cohan observed. "We saw that with Intel's earnings this quarter, which were very good."
Furthermore, Donahoe is just now hitting his stride, he noted. By the end of the next quarter, strategic decisions he has put in place will begin to manifest.
Another bright spot for eBay's long-term performance, Ruffy added, is that earnings estimates for the full year rose to between $1.72 to $1.77, compared with analyst estimates of $1.74.
eBay has been repositioning its business model with an eye toward the long run -- a shift that does not bode well for some of its most loyal sellers. The company has increased its listing fees, for instance, and has given buyers a greater voice in the community, to the distress of many sellers.
The company apparently feels this shift is necessary, because the online auction model is maturing to the point where the one-off auction sale that originally made it so popular is no longer sustainable.
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