Online auctioneer eBay (EBAY) posted 11% higher first-quarter earnings, powered by a strong performance by the company's PayPal electronic payments business. But the results weren't good enough to satisfy investors, who pushed the stock down nearly 8% after-hours on the company's weaker-than-expected forecast.
Ebay is in the middle of a turnaround effort, and investors are closely monitoring the company's performance. "I feel good about the progress, but we've got a lot of work to do," eBay President and CEO John Donahoe told analysts on the conference call. "It's one quarter at a time."
EBay said profits rose to $398 million, or 30 cents a share, nicely ahead of $357 million or 28 cents a share last year, on revenue of $2.2 billion. That's roughly in line with Wall Street expectations. One highlight was Paypal, which generated $809 million in revenue, up 26% from one year ago.
EBay shares were trading at $24.22 after-hours. Despite the company's middling earnings results, UBS analysts Brian J. Pitz and Brian P. Fitzgerald reiterated their price target of $30 for the company.
'Another Strong Step'
"Our first quarter results reflect another strong step toward achieving our three-year growth and profitability goals," Donahoe said in a statement. "We are becoming a more customer-focused and technology-driven company, delivering more innovative products and experiences and driving operating efficiencies to reinvest in growth.
"We are improving the fundamentals of our business, strengthening eBay Marketplaces and aggressively growing PayPal to become the leader in global online payments," he added.
Much of the selling was driven by investors who were disappointed by the company's forecast. EBay said it expects to earn $2.15 billion to $2.2 billion, which is on the low side of Wall Street's expectations of $2.2 billion. For the entire year, eBay said it expects revenue of $8.8 billion to $9.1 billion, short of analysts' expectation of $9.12 billion
On the post-earnings confernece call, eBay executives said that currency changes in the last 90 days -- specifically the recent strength of the U.S. dollar -- will cost the company $125 million in revenue this year.
EBay Earnings Grow, But Stock Falls on Weak Forecast