Growth at PayPal and its core auction business helped eBay beat analyst expectations for the fourth quarter.
Revenue for the quarter was up 16 percent over the same period in 2008, reaching US$2.4 billion, including $112 million from Skype for the period in the quarter that eBay fully owned the company. Analysts were expecting $2.3 billion, according to a poll conducted by Thomson Reuters.
Excluding Skype revenue from the fourth quarters in 2009 and 2008, revenue growth would have been higher, at 19 percent, eBay said.
In November, following a dispute with Skype’s founders, eBay closed the deal that sold off all but a 30 percent stake in the Internet telephone unit to an investor group. EBay got $1.9 billion in cash as part of the agreement. EBay paid $2.6 billion to buy Skype in 2005, but the plan to integrate Internet calling into the auction site to improve communication between buyers and sellers never materialized.
The sale resulted in a net gain for eBay of $1.4 billion, which it recorded as interest and other income.
Net income for the quarter was $1.4 billion or $1.02 per diluted share, using generally accepted accounting principles (GAAP). On a non-GAAP basis, net income was $585.8 million or $0.44 per diluted share. Analysts polled by Thomson Reuters had expected $0.40 per share.
EBay attributed its fourth-quarter results to strong growth at PayPal and solid growth in its auction business. The payments business, which includes PayPal, reported $796 million in revenue, an increase of 28 percent over the same period a year earlier. For the first time, PayPal processed more than $20 billion in a quarter, eBay said. Much of the growth came from a global expansion of PayPal.
EBay also improved its core auction business, which has been under increasing pressure from Amazon.com and other online competitors. The marketplace division, which includes eBay, Shopping.com, StubHub and other e-commerce sites, brought in $1.5 billion in revenue for the fourth quarter, an improvement of 15 percent compared with the previous year.
Early last year, eBay President and CEO John Donahoe launched a three-year plan designed to boost declining revenue in the e-commerce sites. In a statement, he said the fourth-quarter results show that the company has made significant progress against the plan.
For the first quarter this year, eBay expects to report net revenue between $2.1 billion and $2.2 billion, which would represent growth of 12 percent to 18 percent, excluding the impact of Skype.