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PayPal Again Boosts eBay to Profits

April 18, 2012

PayPal Here

For the past quarters, eBay's success has been built on the foundation of its PayPal Payments business. The company continued that trend Wednesday, with a boost from its traditional Marketplaces business as a bonus.

EBay reported net income of $570 million, a 20 percent increase over the same period a year ago. Revenue also jumped 29 percent to $3.28 billion.

In part, that's due to the continued success of eBay's Payments business, also known as PayPal. Payments recorded $1.309 billion in revenue, up 29 percent from the same period a year ago. Total payment volume increased by 24 percent to $33.9 billion, with its Merchant Services division that serves companies outside of eBay outperforming the use of PayPal on eBay by a 2:1 ratio. Home Depot, for example, allows shoppers to pay with PayPal at its 2,000 or so U.S. stores.

PayPal also recently launched Paypal Here, a credit-card reader for mobile point-of-sale payments.

EBay's Payments business will most likely receive increased scrutiny over this quarter and next due to the departure of Scott Thompson, the business unit's former leader. Thompson was named chief executive at Yahoo in January, where he led Yahoo to an investment-fueled profit surge, as well as a plan to refocus the business, including cutting 50 underperforming properties.

"The first quarter was a strong start to the year for us with momentum continuing in our Marketplaces, PayPal and GSI Commerce businesses," said eBay Inc. president and chief executive John Donahoe, in a statement. "We believe that innovation in retail today is technology driven, and consumers are embracing smarter, easier, better ways to shop. We are enabling commerce in this new retail environment, supporting and partnering with sellers of all sizes and giving consumers worldwide the ability to shop anytime, anywhere, for whatever they want."

EBay's Marketplaces segment, which includes its traditional auctions business as well as its effort to transform eBay into a shopping hub, also showed growth. Marketplaces revenue increased 11 percent to $1.73 billion.

Downloads of eBay's suite of mobile apps surpassed 12 million in the first quarter and 78 million globally since the launch of its mobile business in the third quarter of 2008, it said. EBay expects to generate $8 billion in mobile volume transacted in 2012, the company said.

The company's GSI business, which was acquired in the second quarter of 2011, contributed $237 million in revenue for the first quarter.

Ebay expects net revenues in the range of $3.25 to $3.35 billion for the second quarter, it said.



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