eBay beat estimates and pushes mobile sales

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eBay, operator of the world’s largest online marketplace, surged to an eight-year high after fourth-quarter revenue topped analysts’ estimates, helped by record holiday sales on the web and mobile devices.

The results suggest Chief Executive Officer John Donahoe is sustaining a turnaround effort that began in March 2008, when he succeeded Meg Whitman. The company has been pushing to generate more revenue from consumers shopping on tablets and smartphones, and from retailers that use eBay to sell their merchandise. That has resulted in 14 straight quarters of sales growth, and a 75% rally in the shares since Donahoe took the helm.

“The legacy marketplaces business — it’s kind of carried into mobile,” says Bill Smead, chief investment officer of Smead Capital Management. “You get involved with bidding or selling something on eBay, and it’s nice to carry around the device where you’re doing that with you.”

On Cyber Monday in November, at the beginning of last year’s holiday shopping season, transactions on eBay’s mobile applications more than doubled from the year before, while PayPal mobile-payment volume almost tripled.

PayPal’s sales rose 24% to $1.54 billion, and active accounts increased 15% to 123 million. Revenue in the marketplaces division rose 16% to $2.05 billion, while the value of US sales on eBay, excluding cars, trucks and other vehicles, rose 19%. “US sales volume not coming from eBay Motors is the metric everyone focuses on,” Gil Luria, an analyst at Wedbush Securities said. “It’s the best indication of the health of the core business in the US”

Donahoe said he’s continuing his efforts to make sure users are buying on smartphones and tablets as well as eBay’s website. Mobile users tend to complete purchases more often than those browsing on desktop computers, and mobile garners a quarter of new customers, drawing a younger demographic to the site, he said.  eBay’s acquisition of credit-card scanning company Card.io last year will further that goal, because the technology makes it easier for new users to sign up, he said.

“Picture by the end of this year, you download the  eBay or PayPal mobile app, you take a picture of your driver’s license, and you take a picture of your credit card, and that’s registering,” Donahoe said.

eBay’s mobile payment volume reached $13 billion last year, while PayPal’s total was $14 billion – exceeding  eBay’s own projections of $10 billion for each.

Q1 revenue will be $3.65 billion to $3.75 billion, eBay said, compared with an average analyst projection of $3.8 billion. The company forecast profit, excluding some items, of $0.60 to $0.62 a share, versus a $0.64 estimate. eBay’s mobile payment volume will exceed $20 billion in 2013, as will PayPal’s, the company said.

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