Revenue at eBay up 35% in Q4

INTERNET marketplace eBay reported sales and profit that topped analysts’ estimates, buoyed by a campaign to promote its expanded retail offerings and broader use of the PayPal online-payments service.

Fourth-quarter revenue rose 35% to $3.38 billion (€2.6bn), eBay said in a statement. That compares with an average analyst estimate of €2.57bn, according to Bloomberg. Profit excluding certain items was 60 cents (46.4c) a share, versus the average prediction of 57 cents.

Chief executive John Donahoe, eager to propel a stock price that is little changed since he took over in 2008, boosted marketing spending by 25% last year and upgraded eBay’s technology to lure back users who defected to rivals such as Amazon. EBay is also getting a lift as PayPal challenges traditional payment systems by persuading a larger pool of shoppers to use it more often and for bigger purchases.

“EBay right now has very consistent results,” said Colin Gillis, an analyst at BGC Partners in New York. “PayPal is still adding over a million users a month, marketplaces is doing fine, and they continue to position well for mobile.”

EBay rose 4.4% to $31.66 in New York at one stage yesterday. Shares of the company had gained 3% in the 12 months before yesterday.

EBay benefited from a 15% gain in total holiday e-commerce spending, which rose to a record $37.2bn, according to research firm ComScore.

Meanwhile, PayPal is working with Home Depot to let shoppers use the payment system at checkouts, and the companies will extend a trial of the service to 51 stores, primarily in the San Francisco area, Donahoe said.

EBay has been bolstering ties with big retailers, seeking to offer goods from more stores through its June acquisition of GSI Commerce for $1.9bn.

“The experience that eBay and PayPal have in the virtual world with online payments and the addition of GSI Commerce — it gives them a line of logic and a set of disciplines that are easy to carry into an in-store experience,” said Bill Smead, who holds eBay shares as part of $175m in assets at Smead Capital Management.