Monday, April 19, 2010

eBay Inc. (NASDAQ: EBAY): Q1 Earnings Preview 2010

eBay is scheduled to release its Q12010 earnings after the closing bell on Wednesday, April 21, 2010. Analysts, on average, expect the company to report earnings of $0.41 per share in the first quarter with estimates ranging from a low of $0.39 per share to a high of $0.43 per share. Revenues for the quarter are estimated to be $2.18 billion. In Q12009, the company reported earnings of $0.39 per share on revenue of $2.02 billion.

eBay Inc. and its subsidiaries provide online marketplaces for the sale of goods and services, online payments services, and online communication offerings to individuals and businesses in the United States and internationally. It operates in three segments: Marketplaces, Payments, and Communications.

In the preceding Q12010, the San Jose, California based company reported net income of $1.36 billion for the fourth quarter, an increase of 269% from $367 million in the prior year quarter. Earnings per share jumped 258% to $1.02 from $0.29 in the previous year quarter. Excluding items, non-GAAP net income grew 12% to $586 million from $524 million in the year-ago quarter. Earnings per share, on a non-GAAP basis, improved 9% to $0.44 from $0.41 over a year earlier. Revenue increased 16% to $2.40 billion from $2.04 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $0.40 per share on revenue of $2.29 billion.

Gross merchandise volume for the fourth quarter was up 24% from the year-earlier quarter.

EBay is drawing more of its growth from international markets. In the fourth quarter, 58% of marketplace revenue came from international markets compared with 54% for fourth-quarter 2008. This year, PayPal has announced that it is doubling its staff in Asia to 2,000 employees, will partner with financial services companies in China and Singapore and is extending its business off the eBay site onto the world's largest online social network, Facebook. Paypal boasts more than 81 million active accounts in 190 markets and 24 currencies around the world.

Last month, eBay struck an agreement with China UnionPay Co., the mainland's largest electronic payment group, in a deal that will allow Chinese consumers to purchase from overseas merchants using the on-line auction houses' Paypal unit. Under the deal Paypal will gain access to a massive segment of the Chinese market and present a challenge to EBay's China rival Alibaba Group, which operates China UnionPay cardholders will from the third quarter be able to link their bankcard accounts with PayPal and access a network of nearly eight million online merchants.

The company is also pouring more resources into m-commerce after a banner year in 2009, when its mobile channel accounted for $600 million in sales, far more than any other e-commerce site has reported. It predicts that mobile sales will hit $1.5 billion this year.

For the first quarter of 2010, eBay anticipates GAAP earnings in the range of $0.29 to $0.31 per share, and non-GAAP earnings of $0.39 to $0.41 per share. Net revenues are estimated in the range of $2.1 billion to $2.2 billion, representing growth of 12% to 18% excluding the 2009 impact of Skype.

For the full year 2010, the company expects GAAP earnings of $1.29 to $1.34 per share, non-GAAP earnings of $1.63 to $1.68 per share, and net revenues in the range of $8.8 billion to $9.1 billion, representing a growth of 9% to 12% excluding the 2009 impact of Skype.

In terms of stock performance, eBay shares have gained nearly 10 percent since the beginning of the year.

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