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EBay Delivers Solid Q1

EBay's John Donahoe made a strong debut as CEO as the company's first quarter profit surged 22%, thanks to particularly strong numbers from PayPal, eBay's electronic payment service. The Web giant upped its revenue forecast for the year to between $8.7 and $9 billion on earnings per share of $1.70 to $1.75, beating analysts' expectations in both categories.

However, as Deutsche Bank analyst Jeetil Patel points out, most of the positive news came from eBay's non-core businesses, as the Web giant's flagship auctions business continues to be plagued by slowing growth, despite the structural changes implemented by Donahoe in February. At first glance, the auctions sector reported a healthy-looking 19% gain, but most of this came from advertising, classifieds and online ticketing unit StubHub, rather than an expansion in core auction sales. More worrying is the fact that conversions rose just 1%, its slowest growth rate ever, despite a 10% rise in product listings.

While eBay sounded happy with the results, GigaOm's Om Malik said "there was nothing impressive about the results"-which could be construed as a win in the midst of a recession-other than the hefty 61% revenue gain reported by Skype, eBay's voice over Internet Protocol unit. Skype reported revenue of $126 million for the quarter, and added 33 million new registered users. The Internet telephony service now has 309 million registered users around the world, giving it the largest user base among eBay's properties.

Read the whole story at The Wall Street Journal »

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