SAN FRANCISCO (AFX) - EBay Inc. said late Wednesday first-quarter profit fell 3%, hurt by higher operating expenses and the cost of employee stock options.
Sales at the world's largest online marketplace surged 35% to match Wall Street expectations.
San Jose, Calif.-based eBay reported net income of $248.3 million, or 17 cents a share, down from $256.3 million, or 19 cents, a year earlier.
The results matched the average estimate of analysts surveyed by Thomson First Call. Excluding stock option expenses, eBay said profit rose 20% to $306.6 million, or 21 cents a share.
Sales rose to $1.39 billion as revenue from eBay's online payments service, known as PayPal, rose 44%. That business now contributes a quarter of eBay's total revenue, while the majority of its sales comes from its online marketplace.
EBay's operating expenses grew to 56.8% of sales from 49.4% a year ago as the company is launching new services and investing more in its existing businesses.
The company is making 'significant investments' in all three of its businesses, Chief Financial Officer Robert Swan said in an interview with MarketWatch.
EBay launched PayPal mobile several weeks ago. It's also investing more in its communications unit, which includes Skype Technologies, the Internet-based phone provider that eBay acquired last year. EBay also plans to launch eBay Express in the spring. The new service is designed to encourage more shopping activity.
EBay shares fell to $38.30 in after-hours action. The stock traded above $40, or up 4% in regular trading.
Shares of eBay have been under pressure, partly because of its increased investments and competition. Last year, Google launched Google Base, a service that allows people to post items for sale.
'In terms of Google Base, our sense is that there's not much traction,' said Swan. 'We haven't seen an impact' on eBay's business, he added.
Outlook
The company issued sales forecasts for the current quarter and full fiscal year that slightly lagged Wall Street expectations.
In the second quarter, eBay said it expects to generate sales between $1.37 billion and $1.415 billion, below analysts' expectations of $1.42 billion.
For all of 2006, eBay expects sales to be between $5.7 billion and $5.9 billion, while analysts expected $5.95 billion.
San Jose, Calif.-based eBay also expects to generate earnings between 65 cents and 71 cents a share in 2006. Excluding stock-based compensation, and other expenses that may not be indicative of the company' s operating results, eBay expects to post earnings in a range of 96 cents to $1.01. Analysts expect eBay to $1.02 a share this year. This story was supplied by MarketWatch. For further information see www.marketwatch.com.
Sales at the world's largest online marketplace surged 35% to match Wall Street expectations.
San Jose, Calif.-based eBay reported net income of $248.3 million, or 17 cents a share, down from $256.3 million, or 19 cents, a year earlier.
The results matched the average estimate of analysts surveyed by Thomson First Call. Excluding stock option expenses, eBay said profit rose 20% to $306.6 million, or 21 cents a share.
Sales rose to $1.39 billion as revenue from eBay's online payments service, known as PayPal, rose 44%. That business now contributes a quarter of eBay's total revenue, while the majority of its sales comes from its online marketplace.
EBay's operating expenses grew to 56.8% of sales from 49.4% a year ago as the company is launching new services and investing more in its existing businesses.
The company is making 'significant investments' in all three of its businesses, Chief Financial Officer Robert Swan said in an interview with MarketWatch.
EBay launched PayPal mobile several weeks ago. It's also investing more in its communications unit, which includes Skype Technologies, the Internet-based phone provider that eBay acquired last year. EBay also plans to launch eBay Express in the spring. The new service is designed to encourage more shopping activity.
EBay shares fell to $38.30 in after-hours action. The stock traded above $40, or up 4% in regular trading.
Shares of eBay have been under pressure, partly because of its increased investments and competition. Last year, Google launched Google Base, a service that allows people to post items for sale.
'In terms of Google Base, our sense is that there's not much traction,' said Swan. 'We haven't seen an impact' on eBay's business, he added.
Outlook
The company issued sales forecasts for the current quarter and full fiscal year that slightly lagged Wall Street expectations.
In the second quarter, eBay said it expects to generate sales between $1.37 billion and $1.415 billion, below analysts' expectations of $1.42 billion.
For all of 2006, eBay expects sales to be between $5.7 billion and $5.9 billion, while analysts expected $5.95 billion.
San Jose, Calif.-based eBay also expects to generate earnings between 65 cents and 71 cents a share in 2006. Excluding stock-based compensation, and other expenses that may not be indicative of the company' s operating results, eBay expects to post earnings in a range of 96 cents to $1.01. Analysts expect eBay to $1.02 a share this year. This story was supplied by MarketWatch. For further information see www.marketwatch.com.