EBay's second-quarter profit forecast falls short of estimates(Reuters) - EBay Inc (EBAY.O) on Wednesday forecast second-quarter profit that fell short of analysts’ estimates, as it spends heavily on revamping and marketing its e-commerce platform amid stiff competition
from much larger rival Amazon.com Inc (AMZN.O). An eBay sign is seen at an office building in San Jose, California May 28, 2014. REUTERS/Beck Diefenbach/File Photo Shares of the company fell 2.5 percent to $33 in trading after the bell. San Jose, California-based eBay has been making changes to its platform to lure more shoppers as well as better compete with Amazon. That has meant a shift away from online auctions toward fixed-price sales and product landing pages, which are easier to navigate than the dozens of listings sellers would generate for a single good. EBay has also increased its marketing spending, running a rare TV campaign ahead of last year’s holiday shopping period. Sales and marketing costs climbed 4.5 percent to $562 million in the first quarter ended March 31, while product development expense
s jumped 16.3 percent to $278 million. The company’s profit in the second quarter would be affected
by “increased investment to drive improved user experiences and to market our brand, eBay’s finance chief Scott Schenkel sai
d on a call with analysts. EBay said it expects second-quarter adjusted profit of 43 to 45 cents per share. Analysts on average were expecting a profit of 47 cents per share, according to Thomson Reuters I/B/E/S. The company, however, stuck to its earlier forecast for full-year adjusted profit of $1.98 to $2.03 per share,
expecting more growth in the second half of 2017. The first quarter “showed some early indication that their efforts are beginning to bear fruit, said Wedbush Securities analyst Aaron Turner, citing more active buyers coming to the site. “We’re still waiting to see the outcome, he added. EBay said gross merchandise volume — the total value of all goods sold on its websites — rose 2.4 per
cent to $20.95 billion in the first quarter. But the result fell short of analysts’ average estimate of $21.06 billion, according to research firm FactSet StreetAccount. The company’s net income rose to $1.04 billion, or 94 cents per share in the quarter, from $482 million, or 41 cents per share, a year earlier. Excluding one-time items, the company earned 49 cents per share, beating analysts’ average expectation of 48 cents per share. Revenue rose 3.7 percent to $2.22 billion. Analysts on average had expected $2.21 billion.