The owner of largest e-commerce market, EBay Inc, increased when it gave a sales and profit forecast the exceeded analysts’ hopes, after the Chief Executive Officer John Donahoe’s plan worked.
The San Jose, California based company said on yesterday that sales in 2011 will be as high as $10.6 Billion which directs the fastest growth speed in four years. The Profit will be $1.90 to 1.95 a share, excluding the stock option cost and other expenses. On average, analyst in a Bloomberg survey estimated revenue of $10.2 billion and profit of $1.86.
On the Nasdaq Stock Market, EBay rose 3.3 percent in last minute trading yesterday after the early slipping of 35 cents to $29.10. Last year, the stock rose 18%. In the same period, Rival Amazon.com Inc. gained 34 percent.
EBay gained benefit of low U.S. interest rates by selling $1.5 billion of bond last year to make its war chest and again buy shares. In past two months, It also used cash to buy three companies to beef up its mobile team.
EBay us also gaining from the demand for its mobile applications. Total sales through smartphones and tablets will raise couple to $4 billion this year after more than tripling in 2010, the company said. According to BGC Partners who leads the mobile commerce market, EBay hasn’t told how much they have made through their mobile application sales rather than easily giving customers another option to shop.
In an interview, Donahoe said “Our focus to date has been on improving the core consumer experience, particularly for our existing users,” “At some point I will feel it’s good enough that I want to reach out to the inactive users and the people who haven’t been on EBay for a while. That time will happen in the second half of 2011.”
Again PayPal was a growth driver for EBay, in which the revenue rose 22 percent to $871 million last quarter. The division has about 39 percent of EBay’s revenue and may become larger than company’s e- commerce sites, said Donahoe.
Brian Blair, a New York based analyst at Wedge Partners Corp said “PayPal is the most critical part of the story still, It’s where all the growth has been.”
At that very moment, startups like Square Inc. are rising to the sky. To buy net-based payment processors, MasterCard Inc, Visa Inc, and the American Express Co. spent almost $3 billion last year. PayPal’s Prosperity can also be damaged if a proposed U.S. law proves PayPal as a payment network card which will result in caps of fees the business can collect. According to Credit Suisse, This likelihood is very low.
By: Teni Sow | Senior Editor at Tambapress.com and Regular Contributor to Presspresser.com