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Wed Jan 19 2011 16:19:16

eBay Announces Fourth Quarter 2010 Earnings

By: Ina Steiner

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eBay's conference call with analysts is at 5:00 pm EST today, here is the company's press release announcing fourth quarter and full-year results for 2010, you can view the full release with tables on eBay's investor website.

eBay Inc. Reports Strong Fourth Quarter and Full Year 2010 Results
SAN JOSE, Calif.--(BUSINESS WIRE)--Global ecommerce and online payments leader eBay Inc. (Nasdaq:EBAY) today reported that revenue for the fourth quarter ended December 31, 2010 increased 5% to $2.5 billion, or 10% excluding Skype, compared to the same period of 2009. The company recorded fourth quarter net income on a GAAP basis of $559.2 million, or $0.42 per diluted share, and non-GAAP net income of $683.8 million, or $0.52 per diluted share, representing a 24% increase excluding Skype, compared to the same period of 2009. The fourth quarter increase in non-GAAP earnings per diluted share was due primarily to solid productivity, strong growth, and a lower tax rate.

For the full year, eBay Inc. posted $9.2 billion in revenue, net income on a GAAP basis of $1.8 billion, or $1.36 per diluted share, and non-GAAP net income of $2.3 billion, or $1.73 per diluted share. On a non-GAAP basis, excluding Skype, net revenue was up 13% for the full year compared to 2009 and earnings per diluted share was up 18%.

The company's PayPal business delivered strong fourth quarter performance, expanding its leadership position in global payments. PayPal ended the quarter with 94.4 million active registered accounts, adding approximately one million active accounts per month. PayPal's net total payment volume was $26.9 billion in the fourth quarter, driven primarily by growth in its Merchant Services business, including strong growth across global markets, increased merchant adoption and greater usage by customers. Nearly half of PayPal's revenue in the fourth quarter was generated outside the United States, reflecting PayPal's global growth. PayPal continued to innovate in mobile payments and digital goods, launching new products and services to expand its presence on new devices and platforms. For the full year, mobile payment volume increased five times compared to 2009 and exceeded expectations.

The company's Marketplaces business continued to deliver improved performance during the fourth quarter. Gross merchandise volume (excluding vehicles) increased to $15.0 billion and sold items grew 10%, reflecting gains in the United States, United Kingdom and Germany. eBay's fashion business, a focus for the company in 2010, grew faster than ecommerce in the United Kingdom and Germany in the fourth quarter and performed well in the United States. Steady consumer adoption of eBay's portfolio of mobile applications contributed to strong holiday shopping momentum in the fourth quarter and pushed total mobile gross merchandise volume for the full year to nearly $2 billion.

"We delivered a strong fourth quarter and a solid year, driven by our customer focus, commitment to technology-led innovation and our operating discipline, which is enabling us to reinvest in growth," said eBay Inc. President and CEO John Donahoe. "We are driving strong global growth at PayPal and strengthening our core eBay business. And we are innovating quickly in areas such as mobile, which is helping to position us at the forefront of trends shaping the future of shopping and payments."

*In the fourth quarter of 2009, the company recognized a gain on the sale of Skype of $1.4 billion, which was partially offset by a settlement agreement between Skype, Joltid and entities controlled by its founders in the amount of $343.2 million.
 
Other Selected Financial Results
    * Operating margin - GAAP operating margin increased to 23.7%, compared to 7.6% for the same period last year. The year-over-year increase in GAAP operating margin was due primarily to the impact from a settlement agreement between Skype, Joltid and entities controlled by its founders that occurred in the fourth quarter of 2009. Non-GAAP operating margin increased to 29.5% for the quarter, compared to 29.3% for the same period last year. The increase in non-GAAP operating margin was due primarily to productivity gains, partially offset by the impact of certain one-time items related to a legal settlement and indirect taxes, as well as the impact of the stronger U.S. dollar and faster growth in the company's lower margin payments business.
    * Taxes - The GAAP effective tax rate for the fourth quarter of 2010 was 5%, compared to 15% for the fourth quarter of 2009. For the fourth quarter of 2010, the non-GAAP effective tax rate was 8%, compared to 16% for the fourth quarter of 2009. The decrease in the effective tax rate was due primarily to the settlement of uncertain tax positions in the fourth quarter of 2010.
    * Cash flow - The company generated $854.0 million of operating cash flow and $656.5 million of free cash flow during the quarter.
    * Debt issuance - The company issued $1.5 billion in senior unsecured notes in the fourth quarter. In addition, the company launched a commercial paper program allowing it to issue up to $1.0 billion in short-term notes. As of December 31, 2010, $300 million was outstanding under this program.
    * Stock repurchase programs - The company repurchased approximately $400 million of its common stock in the fourth quarter.
    * Cash and cash equivalents and non-equity investments - The company's cash and cash equivalents and non-equity investments portfolio totaled $7.8 billion at December 31, 2010, compared to $5.2 billion at December 31, 2009.

Business Outlook
    * First quarter 2011 - eBay expects net revenues in the range of $2.4 to $2.5 billion with GAAP earnings per diluted share in the range of $0.34 to $0.36 and non-GAAP earnings per diluted share in the range of $0.44 to $0.46.
    * Full year 2011 - eBay expects net revenues in the range of $10.3 to $10.6 billion with GAAP earnings per diluted share in the range of $1.56 to $1.61 and non-GAAP earnings per diluted share in the range of $1.90 to $1.95.

Quarterly Conference Call
eBay will host a conference call to discuss fourth quarter and full year 2010 results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company's Investor Relations web site at http://investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

About eBay Inc.
Founded in 1995 in San Jose, Calif., eBay Inc. (NASDAQ:EBAY) connects millions of buyers and sellers globally on a daily basis through eBay, the world's largest online marketplace, and PayPal, which enables individuals and businesses to securely, easily and quickly send and receive online payments. We also reach millions through specialized marketplaces such as StubHub, the world's largest ticket marketplace, and eBay classifieds sites, which together have a presence in more than 1,000 cities around the world. For more information about the company and its global portfolio of online brands, visit www.ebayinc.com.

UPDATE 1/20/11: eBay filed an amended 8K reporting its fourth quarter earnings to the SEC. The company corrected a typo in a table in its press release that incorrectly reported its full year 2010 international Marketplaces GMV.

Here is eBay's full explanatory note:

eBay Inc. is filing this amendment to its Current Report on Form 8-K, as filed with the SEC on January 19, 2011, to refile the press release attached as Exhibit 99.1 in order to correct a typographical error with respect to reported “ Marketplaces - Gross merchandise volume (excl. vehicles) – International” as set forth in the last row of the “Fourth Quarter and Full Year 2010 Financial Highlights” table on page 1 of the press release. As amended, “ Marketplaces - Gross merchandise volume (excl. vehicles) – International” for full year 2010 has been corrected to read “$33,116”, and not the originally reported “$31,116”, and the numbers under the year-over-year “Change” column have been corrected to read “$4,382” and “15%”, and not the originally reported “$2,382” and “8%”, respectively. All other information included in the original filing is unchanged.





Comments (71) | Permalink

Readers Comments

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: watchme

Wed Jan 19 16:25:10 2011

Doing as good as expected. My business on Ebay also made money last year.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: I can't wait...

Wed Jan 19 16:29:16 2011

to see what Amazon reports next week. If eBay beat (and it looks like marketplaces missed) then you can be sure that the River KILLED estimates!

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Larry V

Wed Jan 19 16:33:36 2011

Looks like PayPal carried the company again last quarter. To my eyes, eBay.com had a weaker than expected quarter.

Watching CNBC, and they didn't seem that bullish.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: John

Wed Jan 19 17:39:29 2011

I had a record year selling on eBay. eBay is right on track, as I see it. Looks like JD is making good on his projections.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: hmmm....

Wed Jan 19 18:07:40 2011

Well, its always funny when these things come out. Any growth at ebay is always touted as some spectacular feat!.

What I'm seeing is the the US marketplace rose 4% Y/Y from 2009.
WHOA, hold me back.
While almost all other similar sites are showing large, solid double digit growth.
So, after the JD turn-a-round time table he HAS succeeded!
He turned a site that when he took over was showing 6%+ Y/Y growth and turned it around to a site that shows 4%.

So, lets put this into perspective:
2008 - site with 6% growth and 13 million listings.

2010 - site with 4% growth and 120 million listings.

JD added 117,000,000 listings to the core of the US marketplace and still COULDN'T show better than before his disruptive innovation scheme.

When do you wake up and look in the mirror and say, "this isnt working"

I think the only reason ebay hasnt sold off the market place  is they are still waiting for someone to come along that will keep the Paypal only enforcement.

If it werent for PP, ebay would be all but dead.
And if it werent for mandatory PP on ebay, PP wouldnt be the global leader in payments.
Its like 2 leaches sucking off each other, eventually one will run out of blood.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

This user has validated their user name. by: Ming the Merciless

Wed Jan 19 18:07:47 2011

Two lying LieWorld trolls so far.

How many more will offer their leverage two cemnts before this thread concludes?

The Ho is an unmitigated disater for the ebafia.com marketplace, and no amount of lipstick makes a CEO out of this pig.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: bill

Wed Jan 19 18:09:37 2011

The way this reads is that the ebay core marketplace sucked, payoal held them afloat. Ebay marketplace overall had a slight increase but so did the entire internet, so ebay core actually gained nothing. With the explosive growth in sales of other venues and the explosive growth of sales on start-ups ebay showing in the US was pathetic. When Amazon's numbers come in the world will know, ebayron will be exposed. to all of you who did not believe ebay was running off small amd medium sellers, this is what was just written in the wall street journal today.
EBay has spent the last few years overhauling the online marketplace to increase emphasis on fixed-price, high-volume merchants. However, U.S. growth in the unit has underperformed overall growth in Internet commerce, a trend Chief Executive John Donahoe has predicted will continue this year, though eBay hopes to close the gap significantly.  

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: My Own Website Not Quite Paying My Bills Yet

Wed Jan 19 18:15:19 2011


Expect Amazon to crush it as usual.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Sayonara eBay

Wed Jan 19 19:00:41 2011

Now we can see the effects of three months of the free any price auction listing promotion.  Our FVFs pushed eBay up to that 4%, along with cutting waaaaaay back on advertising, and loading up our listings with advertising from companies off eBay.

Add to that the fact that Stubhub's sales increased 20% in 2010, plus whatever shopping.com. eBay classified and the other entities that make up the US marketplace earned.

JD had to pull out all the stops just to eke out a measly 4% YOY growth in the US marketplace.  

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Ron

Wed Jan 19 19:19:53 2011

Underwhelming.

But then, we all expected it to be so.  Why eBay management doesn't see the failings of their strategy that favors high volume fixed price sellers to the detriment of small sellers, is beyond me. Anyone else with selling experience on eBay understands the problem perfectly so Donahoe et al are simply in denial.  They are doomed to many more mediocre quarters unless someone owns up over there.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Digby
Web Site

Wed Jan 19 19:26:02 2011

@hmmmmm

Wrong, Paypal would still be the biggest payments service if ebay disappeared tomorrow.

It is sued by all the other auction sites, plus online stores, advertising payments, commissions and private transactions.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Another Wronged Seller This user has validated their user name.

Wed Jan 19 19:48:58 2011

@ hmmmm...

The 6% growth rate was also when the economy was tanking VS now when the economy is improving.

JD has been blaming ebays lackluster performance in the past on the economy. I would say that ebays current 4% growth rate is ONLY attributable to the economic recovery so the actual growth rate is much less. Perhaps at zero or a loss.

In my view 6% growth in an economic decline VS 4% in an economic recovery widens the gap even more.

I truly think ebay growth is static at best if you factor in the economy.

When amazon announces, everyone will see what REAL growth looks like!

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: PissedSeller

Wed Jan 19 19:50:06 2011

My sales on eBay were up 10% year-over-year. Unfortunately, my eBay fees were up 30%!

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

This user has validated their user name. by: Philip Cohen
Web Site

Wed Jan 19 20:10:16 2011

The only purpose for which eBay’s Donahoe-stagnated waters are of any use is the breeding of mosquitoes.

eBay/PayPal/Donahoe: Dead Men Walking.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

This user has validated their user name. by: Philip Cohen

Wed Jan 19 20:14:16 2011

@Digby,

Hey, you got that right: “It is sued by all the …”

eBay/PayPal/Donahoe: Dead Men Walking.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Rich

Wed Jan 19 20:24:08 2011

Paypal is growing while eBay is struggling to bring in and retain buyers and sellers.  Amazon bringing in and maintaining many more buyers and sellers than Ebay. Behind the so called strong numbers is the fact that Ebay is not growing much; only Paypal is growing

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: hmmm again

Wed Jan 19 21:04:02 2011

I've been on bay since 1997.

The only way of saving that place now is a complete split with paypal. Diconnect the two into 2 seperately owned entities.

Bring ebay back to its core. Make PP optional w/paper payments accepted, and other options like google checkout. (would work because most people would still prefer PP because thats what their used too).
Lose the diamond status, make them pay for their listings like everyone else. If they leave, oh well.
Take store out of the core, drop core listings down to around 30 million so that it is pratically searchable (and can BM altogether).
Bring back the store format w/all the perks a store used to have with a little more front end fee and a little less than the current FP 12% FVF.

Re-level the fee structure to bring some back to the front end as opposed to final value. This will keep alot of dollar store junk off the site.

A complete re-levelling of the playing field. Not only between sellers & sellers, but between buyers & sellers.
The old way didnt work, sellers had too much power. The new way doesnt work, buyers have WAY too much power.
Their is a happy medium between buyer/seller protection. It just takes a little human intervention in dispute situations.

Can the dsr's completely, revert to the older style 2 way feedback.
Have a report/abuse system that works, not just one that goes to ebays recycle bin.

And there's so much more that could be done (especially in the trust & safety, fraud areas).

I could turn ebay around in less then a year. So ebay, if your interested in a new CEO that could make your site work again, let me know.
And by the way, I would do it for 1/10th of what your paying your current mistake.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Digby
Web Site

Wed Jan 19 21:21:18 2011

@Philip - you spotted my typo on Paypal! (he he)

@hmmm again.

And go back to all auctions
And no Chinese made stuff
And all American made stuff
Its a big corporate you won't change it.

I would rather ebay disappeared tomorrow so we can all concentrate on one of the well run new sites, like ebid or bonanza, or etsy or bidstart or ecrater or alsoshop.

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

This user has validated their user name. by: Pete

Wed Jan 19 21:42:18 2011

4% LOL that is pathetic it;’s all smoke and mirrors people; the $ appreciated more than that last quarter..lets see next Q1 when the $ tanks again.

Never forget the massive disharmony amongst present and ex eBay sellers

For all the eBay sellers here who are reporting sales increases?
I will stick with Amazon thanks very much as it’s less headaches less work with more sales and more profit

eBay Announces Fourth Quarter 2010 Earnings   eBay Announces Fourth Quarter 2010 Earnings

by: Sayonara eBay

Wed Jan 19 22:11:38 2011

If I'm reading the chart correctly, it seems that eBay buyers are responsible for 1/3 of Paypal's 2010 revenue.

Gee, I wonder why so many eBay buyers chose Paypal?

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