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EBay's Earnings: What Wall Street Expects

Stocks in this article: EBAY

NEW YORK (TheStreet) - EBay (EBAY) reports first-quarter earnings after the markets close on Tuesday and investors will finally be able to focus on the numbers as opposed to the e-commerce company's very public two-and-a-half-month battle with billionaire activist investor Carl Icahn.

In January, eBay said in January that it expected first-quarter net revenue in the range of $4.15 billion to $4.25 billion. The San Jose-based eBay said it expected GAAP earnings in the range of 51 cents to 53 cents a share and non-GAAP earnings in the range of 65 cents to 67 cents a share, including a 1- to 2-cent dilution for the Braintree acquisition, which it completed in December. The March-ending quarter will be the first full quarter of Braintree incorporated into eBay's results.

Analysts had assumed at the time that the guidance would be easy to beat. According to Thomson Reuters, consensus estimates expect eBay to report earnings of 67 cents a share on revenue of $4.228 billion.

Shares of eBay were rising 0.76% to $54.05 ahead of earnings.

EBay had been under pressure from Icahn to split its payments subsidiary PayPal from its wider e-commerce operation and add two independent directors in its board, but eBay consistently fought back saying the company was better off as one. Icahn accused eBay's management of being asleep, he said the board was conflicted, and he tried to make the case that the company's strategy was failing.

Ahead of its shareholder meeting on May 13, eBay and Icahn jointly announced an agreement, where the activist investor withdrew his proposal to separate the PayPal business.

The company agreed to Icahn's suggestion to appoint David Dorman, founding partner of Centerview Capital Technology and the former chairman at Motorola, as an independent director to its board, expanding the number of independent directors to 10 on the 12-member board, which included founder and Chairman Pierre Omidyar, the company's largest shareholder, and President and CEO John Donahoe.

"As a result of our conversations, it became clear that Carl and I strongly agree on the potential of PayPal and our company," Donahoe said in the April 10 press release announcing the agreement. "I respect Carl's willingness to work together to drive sustainable shareholder value today and into the future. His record shows that he has done this with many other companies in the past.

While Icahn rescinded his PayPal proposal, he still believes it is better off as a separate company. "I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future and intend to continue to press my case through confidential discussions with the company," Icahn said in the release. "While John has made no commitments regarding such a separation, he and I have agreed to meet regularly when he is in New York to discuss strategic alternatives."

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