Ebay's second quarter profits down 14%

Thursday, 20 July 2006

Internet auction firm eBay saw its second quarter profits fall by 14% to $250m from last year's £291.6m. The quarterly profits were however in line with expectations as was revenue, which rose by 30% to $1.41 billion.

Ebay has an Irish workforce of 1,200 in Dublin.

The firm also announced last night that it is to start its first ever buyback scheme of up to $2 billion shares over two years. Ebay shares, which rose 5% on the news, have shed 41% of their value this year amid stiff competition.

The firm is also planning on raising the fees retailers operating on its site pay, to counter slower growth.
The news comes as the firm saw second quarter profits fall by 14% to $250m ($135m) from last year's £291.6m.

'We were stronger in Pay-Pal and Skype and Shopping.com and had slightly slower growth rates in our core [auction] business,' said Meg Whitman, chief executive of eBay. But she added 'we think it could be stronger'.

The latest earnings show the online payments business PayPal, saw customers increase by 44% compared to a year ago and generated $330.7m - a rise of 39% on last year's second quarter.

However, eBay is facing growing competition from web search giant Google which recently launched its own online payments firm.

Ms Whitman said the firm was not concerned about Google impacting Paypal's performance, adding 'we are going to innovate as we always have.'

While stocks were boosted by the news of the $2 billion buy-back plan scheme the figure is tiny when seen in the light of the $40 billion that has been wiped off the value of eBay's shares in the past 18 months.