EBay 2Q profit falls as marketplace's revenue drops

SAN FRANCISCO (AP) - The recession continued to hurt eBay Inc. in the second quarter, as earnings and revenue fell amid a drop in sales in the main online marketplace, overshadowing growth in the PayPal online payments and Skype communications units.

The pioneer of online auctions, which is now trying to revitalize its Web site, managed to come in ahead of Wall Street's expectations, though, and predicted third-quarter earnings and revenue largely in line with analysts' views.

Shares of San Jose-based eBay rose 60 cents, or 3.1 percent, in extended trading after the results were released Wednesday. It finished regular trading up 52 cents, or nearly 3 percent, at $19.45.

EBay said it earned $327.3 million, or 25 cents per share, in the April-June period, a 29 percent decrease from $460.3 million, or 35 cents per share, in the year-ago quarter.

EBay earned 37 cents per share when excluding items, beating by a penny the predictions made by analysts polled by Thomson Reuters.

Revenue fell 5 percent to $2.1 billion, though it beat analysts' estimate for $1.99 billion in sales.

Revenue from eBay's marketplaces unit, which includes eBay, Shopping.com and other e-commerce Web sites, sank 14 percent to $1.26 billion - a decline the company attributed to the weak economy and strength in the dollar. When the dollar is stronger, transactions in other currencies translate into fewer dollars.

The company's payments unit, which houses online payment service PayPal and short-term credit service Bill Me Later, saw revenue climb 11 percent to $669.3 million. Revenue from online telecommunications service Skype jumped 25 percent to $170 million.

EBay said that its U.S. gross merchandise volume - which measures the value of all transactions on eBay, excluding vehicles - fell 10 percent to $11.13 billion for the quarter. The number of active users, which helps show how the company is doing at attracting new buyers and sellers, inched up just 2 percent to 88.4 million.

For the current quarter, eBay forecast a profit of 22 cents to 24 cents per share, or 34 cents to 36 cents on an adjusted basis, on $2.05 billion to $2.15 billion in revenue. Analysts were looking for a profit of 35 cents per share on $2 billion in sales.

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AP-CS-07-22-09 1709EDT