EBay: PayPal and Skype can’t save declining marketplace

January 21, 2009 | Anthony Ha | Comments |

E-commerce giant eBay just announced its earnings for the fourth quarter of 2008. Revenue is down, but the San Jose, Calif. company did manage to beat analysts’ earnings expectations. It reported revenue of $2.04 billion, down $145 million from the same period in 2007, earning 41 cents per share (non-GAAP). That’s 2 cents higher than analysts expected.

The source of eBay’s decline is its core product, the online marketplaces, including eBay.com, Shopping.com, StubHub.com, and others. Collectively, marketplace revenue fell to $1.27 billion, down 16 percent from Q4 2007. That’s no surprise, given the broader downturn and reported declines in both offline and online holiday shopping. EBay points to the strengthening the U.S. dollar as another source of its woes, since 55 percent of marketplace revenue comes from outside the United States. EBay’s marketplaces, while still leading in e-commerce traffic, face growing competition from Craigslist and especially Amazon (see comScore chart below).

The company’s other business units actually did rather well. The payments division, which includes PayPal, posted $623 million in revenue, up 11 percent from last year, while Skype contributed $145 million, up 14 percent. But growth in these divisions can’t make up for the big decline in the marketplaces, and eBay lowered its predictions for the first quarter of 2009 to between $1.80 and $2.05 billion.

EBay stock has fallen 6.1 percent in after-hours trading.

[photo:flickr/annia316]

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About the Author, Anthony Ha

Anthony is VentureBeat's assistant editor, as well as its reporter on enterprise technology, cloud computing, and tech policy. Before joining VentureBeat in 2008, Anthony worked at the Hollister Free Lance, where he won awards from the California Newspaper Publishers Association for breaking news coverage and writing. He attended Stanford University and now lives in San Francisco. Reach him at anthony@venturebeat.com. You can also follow Anthony on Twitter.

  • Jon
    Ebay needs to come-out with something new and innovative, it can't compete with the other marketplaces out there so its demise will be slow and predictable.

    Jon
    http://WoodMarvels.com - Create Unique Memories
  • Peter Antypas
    Too late. The game is over for them. They are in no position to attract innovative thinkers. Their only chance is to form a venture fund and invest in disruptive opportunities, keep them separate and physically removed from the main operation, and let them run like real startups. But that strategy takes visionary leadership, not to mention balls.
  • Well, I think PayPal and Skype are still viable, the question is now to cut its losses on on the marketplaces.
  • I'm surprised they beat expected earnings. A lot of people are detouring away from eBay. Better prices from eCommerce stores. In addition, eBay overcharges like mad with their posting/ending/paypal fees. As a total, losing 10% on a sale isn't really worth the contribution margins to a lot of sellers. Declining consumer goods also results in less postings. Time to open a better fleabay!
  • Well, they did badly, just not as badly as expected.