Can eBay Resist The 'Maturity' Label?
Page 1 of 1
They called eBay mature. As one of the first truly profitable Internet companies and a survivor of the last bust, maybe eBay could have taken some pride in the label.
In fact, some on the street were saying that when your biggest worry is that you've maxed out the U.S. market, it might be time to set less aggressive goals for growth.
But eBay wanted no part of it, JupiterKagan research analyst Vikram Seghal told internetnews.com.
Yesterday, eBay gained 3 percent in late trading after the company posted 30 percent sales growth to $1.45 billion.
Earnings of 26 cents a share also beat estimates. Fourth-quarter sales guidance of $1.62-$1.68 billion was to the lower end of $1.66 billion guidance, as was earnings guidance of 27-28 cents a share.
"It's back," Seghal said of eBay's growth.
Seghal specifically credits eBay's willingness to diversify its product offerings, with new services such as eBay Express, while maintaining an emphasis on its bread and butter -- auctions.
EBay express provides a customized product set for users based on items that are new and available right away. It also offers shopping cart functionality to helps users add items to carts from multiple vendors and check out whenever they want.
Seghal said eBay Express offers an alternative to auction shopping and could help the site gain new users and meet its goals for growth.
But Seghal said that growth wouldn't be worth if it eBay weren't also actively protecting their revenue from auction shopping.
He said eBay did that effectively in July then it raised Store Inventory listing fees in an attempt to lure vendors and users back into auction shopping where eBay earns higher margins due to faster turnover.
Given yesterday's better-than-expected financials, call that incentive play a savvy move. Just don't call it mature.