Ebay Revenues & Profits Fall As Consumers Rein In Expenses

EBay Inc., the world’s largest online auctioneer, has reported a sharp decline in quarterly profits and revenues, with the auctioning website struggling against the plunging customer demands in current frosty economic climate.

The company announced that its net profits for the final quarter of last fiscal year declined by 31 percent to $367million as against the same period a year ago.

In addition, net revenues for the company have also plunged considerably by seven percent to $2.04billion, showing a substantial decline of a $145million on year-over-year basis.

The company cited economic recession and strengthening dollar as the factors responsible for such a significant drop in its revenues.

However, some of the damage in fourth quarter had been checked by the strong performances of its internet call services, Skype, and online payment services, PayPal, as revenues for the former rose by 26 percent to $145million, and those for the latter were up by 11 percent to $623million, on year-over-year basis.

Cumulatively, the company posted impressive financial results for the entire fiscal, as its net profits for the year was $1.78billion, rose from $348million in 2007, the company notified.

The company further said that it expects its revenues somewhere in the range of $1.80billion to $2.05billion for the first quarter of this year.

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Our Comments

One would expect Ebay to be one of the winners of any economic downturn as consumers flock online and buy cheap, second hand products rather than new one. However, this is not happening as Ebay's revenues painfully showed because this recession could well be more serious, prompting people stick to bare necessities - groceries, utilities and the mortgage. Ebay shares slumped by more than 12 percent during the day.

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