EBay's 4Q performance caps company's best year yet

Published on NewsOK Modified: January 16, 2013 at 6:58 pm •  Published: January 16, 2013
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SAN FRANCISCO (AP) — EBay finished last year with a flourish as bargain-hunting holiday shoppers flocked to its Internet shopping mall and digital payment service to help lift the company's fourth-quarter earnings above analyst projections.

The results announced Wednesday served as the exclamation point on the best year yet for eBay Inc., an e-commerce pioneer founded in 1995 when the concept of buying merchandise online seemed absurd.

Online shopping has since become a staple for hordes of consumers, turning eBay into a thriving business and a Wall Street favorite.

But the growing popularity of smartphones and tablet computers is once again changing the way many people shop. EBay is trying to remain at the forefront of the shift by retooling its online bazaar and popular payment service, PayPal, to work better with mobile devices.

The company, based in San Jose, Calif., says its mobile applications have been downloaded on to more than 120 million devices, putting its services in easy reach of consumers even as they peruse the aisle of brick-and-mortar stores.

"Mobile is quickly becoming the new normal, and we are leading this new way consumers shop and pay," eBay CEO John Donahoe told investors during a Wednesday conference call. He predicted that PayPal and eBay's marketplaces division, where most of eBay's shopping activity occurs, will each process more than $20 billion in mobile transactions this year.

EBay doesn't keep all the revenue that passes through its services. PayPal charges merchants a fee to deliver payments from customers, and eBay collects fees for products listed and sold online.

The strides that eBay has made in the mobile market have impressed investors, helping to propel the company's stock price to a 68 percent gain last year.

The company's fourth-quarter performance provided another boost as eBay's stock edged up 62 cents to $53.52 in Wednesday's after-hours trading. The market's reaction was tempered by a management forecast for the current quarter that was slightly below analysts' expectations.

The stock isn't far from its split-adjusted peak of $59.21 reached at the end of 2004 when Meg Whitman, now the CEO of Hewlett-Packard Co., was still running eBay. By the time Whitman stepped down in 2008, eBay's stock had slipped below $30 as the company's growth tapered off.

Donahoe, though, has engineered a turnaround by de-emphasizing the online auctions that were once eBay's foundations and, in the past two years, intensifying the focus on the rapidly growing mobile market.

"EBay is back in a big way now," Donahoe said during a Wednesday interview.

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