 "EBay drops on economic 'headwinds' in Europe, Korea")
EBay Inc reported solid second-quarter results on Wednesday but Chief Executive John Donahoe warned of economic “headwinds” in the second half of the year from Europe and Korea.
Those comments, and weaker-than-expected third-quarter forecasts, sent shares of the e-commerce company down more than 5 percent in after-hours trading.
Solid second-quarter results!
“It’s not a quarter in which they absolutely crushed it,” said Ron Josey, an analyst at JMP Securities. “They are doing well, but people were hoping for more.”
Second-quarter net income was $822 million, or 63 cents a share, versus $730 million, or 56 cents a share, in the same period a year earlier. Revenue rose 14 percent to $3.88 billion. EBay was expected to earn 63 cents a share on revenue of $3.89 billion, according to Thomson Reuters I/B/E/S.
“Macroeconomic headwinds in Europe and Korea will continue to be a challenge in the second half of the year,” Donahoe said. “But our core businesses are strong.”
EBay lagged rival Amazon.com Inc for several years, but Chief Executive John Donahoe has led a turnaround that focuses on mobile shoppers, international expansion and tie-ups with local physical stores. EBay is spending heavily on these initiatives, and hopes they will fuel revenue and profit growth in coming years.
EBay’s third-quarter forecasts were weaker than expected, while the company stuck to its full-year guidance. Wall Street has been worried about the second half of 2013.
“This puts a lot of pressure on eBay’s fourth quarter, which has to be good for the company to meet its full-year forecasts,” Josey said.
EBay shares fell 6 percent to $53.94 in after-hours trading on Wednesday.
EBay gets a lot of its revenue and profit from overseas transactions, so economic weakness in Europe and parts of Asia can weigh on the company’s results.
EBay and Amazon cited Europe’s weak economy as a problem during this year’s first quarter.
Reuters
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