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TheStreet Open House

Why eBay Is Tumbling: What's Wall Street Saying

NEW YORK (TheStreet) - EBay (EBAY) made noise with its first-quarter earnings report last night by announcing that it planned to repatriate approximately $6 billion in net foreign earnings, creating a $3 billion non-cash charge taken in the first quarter.

EBay said that the money could be used to help the San Jose, Calif.-based company's "financial flexibility," as it looks to invest in its business, particularly PayPal or possible acquisitions. That said, the company stopped short of saying that a deal was imminent.


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"Just to be clear: we are not announcing any large U.S. based acquisition," eBay CFO Robert Swan said in an earnings call with analysts after first quarter results were released.

EBay reported a non-GAAP profit of 70 cents a share on revenue of $4.3 billion, beating core earnings forecasts. GAAP earnings were clouded by what eBay characterized as a "discrete tax charge" of about $3 billion on the repatriation of $6 billion in foreign profits. On a GAAP basis, the company lost $1.82 a share for the quarter.

The company guided Wall Street below expectations for the second quarter, saying revenue was expected to be $4.325-to-$4.425 billion and GAAP EPS between 51 cents and 53 cents a share. For the full-year, eBay now forecasts between $18 billion to $18.5 billion in revenue and $2.95-to-$3 in non-GAAP EPS.

EBay has been involved in a very public proxy fight with billionaire activist investor Carl Icahn who wanted the company to either spin off or sell its payments subsidiary, PayPal. However, eBay held firm, announcing an agreement with Icahn on April 10 in which the company would keep PayPal for now but nominate an independent director to its board. The company agreed to Icahn's suggestion to appoint David Dorman, founding partner of Centerview Capital Technology and the former chairman at Motorola.

Shares were tumbling 5.4% to $51.58 on Wednesday. Here's what Wall Street analysts were saying following earnings.

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