Ebay posted better-than-expected quarterly results after managing to slow a persistent deterioration in its main Web auctions and retail business, propelling its shares nearly 5 per cent higher.
But executives and analysts warned that consumer spending remained weak with unemployment rising and credit still tight, likely dampening revenue growth in coming quarters.
Chief Executive John Donahoe said the company was aggressively trying to turn itself around, after the company gave a third-quarter profit forecast last night in line with analysts' estimates.
In the second quarter, gross merchandise volume, or the total value of goods sold, excluding vehicle sales, fell 10 per cent, sharply less than the 16 per cent decline in the first quarter and a better showing than investors had foreseen.
Net profit was $327.3 million, down 29 per cent compared with the $460 million earned in the same period a year ago. Revenue also fell slightly, from $2.2 billion to $2.1 billion.
Sluggish growth in recent years at eBay's marketplaces division - which began with online auctions but now encompasses classifieds, fixed price sales and shopping sites - has kept eBay shares under pressure.
The once fast-growing company that pioneered Web auctions is also fending off competition from rivals like Amazon, which said today it was acquiring online shoe seller Zappos.com for about $928 million.
Now eBay is relying on PayPal, its booming online payments unit that accounts for nearly a third of total sales, as a future growth driver.
Mr Donahoe said the gross merchandise volume figures - a data point keenly watched by Wall Street analysts - improved for the first time in seven quarters, as more items moved. While sales in auctions fell, they rose in fixed sales by 19 per cent.
“Our core marketplaces business is stabilizing with the economy as we execute against our turnaround priorities," he told analysts on a conference call.
Mr Donahoe also pointed to growing market share for PayPal, which is adding new merchants, and the on-track integration of BillMeLater, the payments company acquired last year.
Still, he cautioned that it was too soon to declare victory and the planned three-year turnaround of marketplaces would be a "process of steady, consistent progress."
Pacific Crest analyst Steve Weinstein did not see a quick return to true growth.
“You can say they're not in this steep nosedive anymore but it doesn't look to me like they've really addressed the issues to get growth,” Weinstein said. “When I look at the quarter, they beat a little bit, but if I back out Gmarket and the favourable switch in currency - not really.”
Reuters