This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

5 Big Takeaways From eBay's Earnings

NEW YORK (TheStreet) - EBay (EBAY - Get Report), on Tuesday evening, posted a mixed first quarter earnings report. While revenue growth at the e-commerce giant's payments, marketplace and enterprise divisions is generally in the high teens, the company gave second-quarter guidance that was a bit weak.

EBay: We Are Not Announcing Any Large U.S. Acquisition

EBay Takes $3 Billion Repatriation Charge, Beats Earnings

More to the point, eBay raised more than a few eyebrows after disclosing a plan to repatriate $6 billion in net foreign earnings, creating a $3 billion non-cash charge against the company's first quarter earnings.

That charge meant eBay lost $1.82 per share in the first quarter. Adjusted EPS to exclude that non-cash charge, however, beat analyst consensus and the company's previous guidance. EBay reported a non-GAAP profit of 70 cents a share on revenue of $4.3 billion, beating core earnings forecasts.

But what is there to make of the $3 billion tax-related charge? Taking eBay's words at face value, the $6 billion net repatriation may aid the company in a variety of ways, bolstering U.S. cash balances significantly and allowing for investment in products such as PayPal, Bill Me Later and StubHub, while also giving the financial might to quickly make an acquisition.

According to eBay, the repatriation signals it sees investment opportunity in the U.S. versus abroad where much of the company's foreign earnings had been parked. When pressed to explain that change, eBay was a bit unclear as to whether it saw immediate investment opportunity in the U.S., for instance a large acquisition, or whether its repatriation reflected a long-term change.

"The company denied having a specific acquisition target(s) in mind, but we believe this move sends up a bright flare over Silicon Valley that it is looking for deals," Wells Fargo analysts said in a client note.

On a call with analysts, eBay confirmed that it continues to invest heavily in BRIC countries. However, the performance of eBay's BRIC investments and growth forecasts may be diverging. While eBay continued to express confidence in the company's growth trajectory in China and India, CFO Robert Swan did confirm geopolitical risks in Russia and a sharply slowing economy in Brazil had caused business in both regions to recently slow year-over-year.

One area of weakness was eBay's Marketplace division in the U.S>, which grew 10% year-over-year, while U.S. e-commerce grew 12% in the second quarter. Those revenues were impacted by weak auction activity at eBay and a falling take rate at StubHub, according to Bank of America Merrill Lynch analysts.

eBay shares were falling over 6% to $51.05 in early Wednesday trading.

Overall, many may be scratching their head from eBay's results, but, it's hard not to see the company as among the best-positioned in Silicon Valley to profit from consumers' increasing reliance on smartphones, mobile applications and new payment technologies to shop.

Furthermore, after a bruising battle with activist investor Carl Icahn that did cause some proxy-related expense to increase, eBay's investments such as Braintree, Magento and StubHub appear poised to pay off.

EBay Earnings: All Quiet On The Russian Front?

This year may be a crucial time where eBay's long-term investments in mobile commerce, local commerce, international expansion and data analytics more apparent to shareholders, Carl Icahn included.

Here are five key quotes from eBay's conference call, which bear watching.

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
EBAY $57.63 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs