EBay Beats Earnings and Revenue Estimates

EBay shot past the high-end of its third quarter earnings estimates Wednesday, even as the e-commerce giant struggles to hold onto sellers and grow its gross merchandise volume.

The e-commerce giant (EBAY) reported revenues of $2.25 billion in the quarter, up 1% from the same time last year. Wall Street was expecting eBay to post revenues of $2.18 billion for the quarter, following guidance the company gave last month that it expected to reach the high-end of its previous estimates of $2.13 billion to $2.18 billion.

On the profits front, eBay reported earnings of nearly $531 million, or 40 cents a share, compared with $502 million a year ago. Analysts were anticipating the e-commerce giant to report a profit of 37 cents a share, according to a research report by analyst Mark Mahaney of Citigroup.

EBay shares jumped in after-market trading by 7.17% to $27.50 a share.

"We delivered strong third quarter results, with great performance at PayPal and stable results at eBay," said John Donahoe, eBay CEO, in a statement. "PayPal gained share globally and eBay continued to improve key metrics. Our company is strong and we are managing our global portfolio to balance strengths, challenges and opportunities, invest in growth and deliver consistent performance."

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Going forward, eBay expects to report fourth quarter revenues higher than the market's current expectations. The company says its fourth quarter revenues could land between $2.39 billion to $2.49 billion, higher than the $2.40 billion analysts are anticipating. However, the company expects earnings of 37 cents to 40 cents in the fourth quarter, less than the 44 cents estimated by some analysts.

One of the key metrics to evaluate eBay's performance is its gross merchandise volume (GMV), which has been giving up ground. Justin Post, a Bank of America Merrill Lynch analyst, said a key area investors need to focus on is the trend for eBay's gross merchandise volume, excluding automobile sales, versus the performance of the e-commerce market and Amazon.

EBay reported its U.S. marketplace gross merchandise volume, excluding vehicles, rose to $4.9 billion in the quarter, up 2% over the same time last year. That performance was far better than the 3.5% decline that some analysts were expecting.

"We're making it easier to shop on eBay," said Donahoe, during a conference call with analysts.

He noted eBay can be used on all the four major mobile platforms -- iPhone, Android, BlackBerry and Windows Phone 7. In another improvement, the company has taken steps to elevate consumers security concerns by covering the cost of shipping and the purchase price, if consumers don't receive the item they purchased or the product received is not as described by the seller.