Summary
The once-explosive growth of eBay has slowed recently, causing already wary investors to be ambivalent about the stock. Though eBay met investors' expectations for the quarter, many were hoping that the online auction giant would exceed them. Thus, prices were fairly stationary following its latest quarterly report.
Though eBay managed to increase its profits 28 percent for the quarter, Wall Street was unimpressed. eBay cited increased costs for search engine marketing as a prime reason for its slowed growth, though the company also reported that its expansion into Germany has not been as successful as it had hoped. However, overseas growth as a whole was brisk.
Original source:
http://www.businessweek.com/bwdaily/dnflash/apr2005/nf20050421_3474_db016.htm
Details
On Apr. 20, investors worried about eBay's (EBAY) slowing growth got a little encouragement -- just not enough to change their minds much.
That met analysts' expectations, but no more.
The one glimmer of an upside came as the online marketplace slightly upped its estimates for profit and sales growth for the year, to between $0.71 and $0.73 per share net income, on sales of $4.27 million to $4.36 billion.
But that apparently wasn't enough to energize investors, who played ping-pong in after-hours trading, moving eBay's share price up and down a point or so.
That followed a 3% rise, to $33.11 a share, before the report, thanks to the afterglow of Yahoo's (YHOO) better-than-expected quarterly earnings.
"The results are not likely to alter perceptions," says Pacific Growth Equities analyst Derek Brown, who has an "underweight" rating on eBay, which is a BusinessWeek 50 company.
Growth in listings and gross sales also continued to decline, as Chief Executive Margaret Whitman pointed out.
"We saw softer listings growth in January than expected," she said during a conference call, though eBay promotions helped pick up the pace by mid-February.
According to Scott Devitt, an analyst with Legg Mason Wood Walker, eBay clearly managed to avoid underperforming against expectations, which many other analysts had feared.
In any case, the reaction to eBay's more recent results were a far cry from the alarm that followed the company's fourth-quarter report in January (see BW Online, 1/20/05, "eBay Loses Some Mojo").
She said she expects growth to resume in coming quarters, owing to increased marketing and new features.
Those expenses weren't quite as onerous in the first quarter, falling to 26% of revenues, from 29% in the previous quarter.
About the author: Mike Adams is an award-winning journalist and holistic nutritionist with a mission to teach personal and planetary health to the public He is a prolific writer and has published thousands of articles, interviews, reports and consumer guides, and he has created several downloadable courses on survival and preparedness, including his widely-downloaded course on personal safety and self-defense. Adams is an independent journalist with strong ethics who does not get paid to write articles about any product or company. In 2010, Adams created TV.NaturalNews.com, a natural living video sharing site featuring thousands of user videos on foods, fitness, green living and more. He's also the founder and CEO of a well known email mail merge software developer whose software, 'Email Marketing Director,' currently runs the NaturalNews email subscriptions. Adams is currently the executive director of the Consumer Wellness Center, a 501(c)3 non-profit, and pursues hobbies such as martial arts, Capoeira, nature macrophotography and organic gardening. Known as the 'Health Ranger,' Adams' personal health statistics and mission statements are located at www.HealthRanger.org
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Tuesday, May 03, 2005
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