SAN FRANCISCO: EBay, once the online equivalent of a garage sale, is successfully transforming itself into a dominant force in mobile retailing, as seen by the successful turnaround of its Internet marketplace business and double-digit growth of PayPal, its online payments system. EBay reported Wednesday that it more than doubled net income in the second quarter to $692 million, or 53 cents a share, a 144 per cent jump from the quarter a year earlier. The company said revenue climbed 23 per cent, to $3.4 billion, slightly higher than the $3.36 billion Wall Street analysts expected. John J. Donahoe, eBay's chief executive, attributed those numbers to the successful turnaround of the company's marketplaces business, which delivered $1.8 billion in revenue last quarter - its highest quarterly revenue ever - and the continued growth of PayPal.
"The eBay marketplace is back. PayPal is still growing faster and will eventually catch, but that is still a couple years away," Donahoe said in an interview. While eBay's Marketplaces, its term for e-commerce, is still its biggest business, PayPal brought in $1.4 billion last quarter, a 26 per cent jump from the same quarter a year ago. The company, based in San Jose, Calif., expects each business to transact $10 billion in volume in 2012, more than double the volume in 2011. Wall Street is optimistic. EBay's stock has gained more than 33 per cent so far this year, more than the 25 per cent gain of rival Amazon. The stock closed Wednesday at $40.46, up 3.56 per cent, before the announcement, and then jumped 4.7 per cent in after-hours trading.
"Marketplace has completely turned around and PayPal is the No. 1 source for online payments," said Colin Gillis, an analyst with BCG Partners. EBay recently introduced PayPal into the physical stores of 16 retailers, notably Home Depot and Office Depot. That physical presence could help the company fend off new competitors in mobile payments, notably Google's mobile payments app, Google Wallet, and Square, the three-year-old mobile payments startup run by the Twitter co-founder Jack Dorsey. EBay's earnings report arrived one day after it acquired Card.io, a startup with a technology that allows users to take a photograph of their credit card with their smartphone to use for mobile payments. EBay did not disclose how much it spent to acquire Card.io and did not say if it used PayPal to complete the transaction.
