Ebay Q2 profit forecast falls short of expectations


Ebay Q2 profit forecast falls short of expectations

Warwick Ashford

Ebay shares fell up to 8.8% after its second quarter profit forecast of $0.37 to $0.39 a share missed average estimates of $0.40.

Ebay said it expects revenue in the second quarter to be between $2.15bn and $2.2bn, which falls short of analyst forecasts of $2.21bn.

The modest forecast signals that Ebay chief executive officer John Donahoe is struggling to stem the loss of customers to Amazon, according to analysts at Bloomberg.

Ebay is working to restore growth at the company's e-commerce site after the recession by expanding inventory, strengthening fraud protection and moving away from auction sales.

But these efforts have failed to meet expectations set by stronger performances by other retail organisations, according to analysts.

Ebay's first quarter net income rose 11% to $397.7m, but the firm recorded only 1.2% growth in monthly US visitors, compared with 27% growth reported by rival Amazon.com.

Ebay's sales in the first quarter climbed 8.7%, but Amazon.com is expected to post first quarter sales growth of 40%, according to a Bloomberg survey.

Buyers will continue to migrate away from Ebay until the overall convenience and trust and safety of the Ebay marketplace has improved, said analysts.

The drop in share prices of around 8% for Ebay and chipmaker Qualcomm and 3% for Citrix Systems is an indication that the technology sector rebound is not as strong for all parts of the industry.

Failure by these firms to meet expectations comes amid strong and better-than-expected first quarter results from Apple, IBM, Intel, AMD and Google that have led to reports of a tech sector recovery.

The mixed picture left a question mark over the breadth of the tech recovery, according to the Financial Times.

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