EBay Inc on Wednesday reported lower quarterly net profit, sales and margins, but results beat Wall Street expectations and shares of the online auctioneer rose nearly 6 percent.
Ebay, in the midst of attempting a multiyear turnaround, also unveiled a second-quarter earnings outlook that matched expectations.
A stronger U.S. dollar hurt eBay's sales and profitability, and eBay's marketplaces business, its largest unit, saw an 18 percent revenue decline in the first quarter.
The positive news is we've been accustomed to being disappointed, said Ryan Jacob, portfolio manager at Jacob Internet Fund, which has a position in eBay. In this case, they did exceed the numbers a bit and the guidance was in line so that alone is probably cause for some relief.
But he added: The core problems are still there.
The company, which announced last week a plan to spin off its Skype Web telephone business, said first-quarter net profit was $357 million, or 28 cents per share, down from $460 million, or 34 cents per share, a year earlier.
Excluding one-time items, earnings per share were 39 cents, exceeding the 34 cents per share expected, on average, by analysts, according to Reuters Estimates.
Revenue slid 8 percent to $2.02 billion, the company said, still above the $1.95 billion expected, on average, by analysts -- impacted by the effects of a stronger dollar and the difficult global economy. Some 54 percent of eBay's sales come from its international businesses.
At PayPal, the company's Web payment service, revenue rose 11 percent. They rose 21 percent at Skype.
But operating profit margins fell to 20.9 percent in the quarter from 25.2 percent a year ago, due to a stronger U.S. currency and a shift to lower-margin businesses, eBay said.
Gross merchandise volume excluding vehicle sales -- which measures the total value of goods sold on eBay -- fell 16 percent.
EBay said it expects second-quarter adjusted earnings per share of 34 cents to 36 cents on revenue of $1.85 billion to $2.05 billion.
Wall Street, on average, has been expecting earnings of 35 cents per share on revenue of $1.97 billion.
Last week, acknowledging that Skype was a mismatch with the rest of the company, eBay said it would spin off the unit through an IPO, likely in the first half of 2010.
Also last week, eBay offered to buy South Korean online retailer Gmarket Inc for up to $1.2 billion in a deal that would make eBay the leader in that country. The company already has secured 67 percent of Gmarket.
While touting PayPal as its growth driver, EBay has tried to revive a stalled marketplaces unit -- which does auctions, fixed priced goods, classifieds and shopping sites -- that has been walloped by competition from a host of rivals, including Amazon.com Inc.
Along with cost-cutting, EBay has tried to streamline selling on its site and improve security to capture more buyers and sellers, and says growth will come from selling liquidated, off-season goods in the so-called secondary market.
In March, eBay said total adjusted earnings would grow in the mid-single digits on a percentage basis from 2009 to 2011. Global revenues will reach $10 billion to $12 billion by 2011, it said.
A spin off of Skype, which eBay bought for $2.6 billion in 2005, is unlikely to reap the original purchase price. Some analysts doubt that Skype could fetch more than $2 billion in a weak market.
Sources familiar with the matter have said eBay is open to an outright sale of Skype, and Skype co-founders Niklas Zennstrom and Janus Friis have contacted private-equity firms to make a joint bid.
Ebay shares, which have gained 22 percent in the past month, rose 6 percent to $15.63 after closing on the Nasdaq at $14.78, up 3.43 percent.
(Reporting by Alexandria Sage; Editing by Edwin Chan, Phil Berlowitz)