Wall St. was not in love with ebay’s (EBAY) earnings. They were outstanding, but the company’s forecasts were light.

According to The Wall Street Journal, "In the second quarter, eBay’s faster-growing online payments, classifieds and advertising businesses helped counteract slower sales at the auctions business." Even with a modest performance from the company’s original business, eBay earnings were up 22%. And, eBay raised its forecasts for the rest of the year, but very slightly.

eBay’s earnings say more about the broader economy than they do about eBay.Traditional classified and advertising businesses, traditional means of payment, and the commerce of auctions in the off-line economy are all in deep trouble. Ask a newspaper publisher or a retail shop. The trend in eBay’s numbers runs against almost every other report from the sectors where it competes.

Ebay’s earnings show that e-commerce is eating away at industries like newspapers and payments even at the same time that the recession is undermining core demand. The internet is taking businesses which are already weak in the current economy and making them weaker.

All of this makes eBay a touch-point for how the economy will look over the next decade. Even in a recovery, some the pools of revenue which feed many large businesses will have moved online. When the good times roll again, newspapers and retail will not see the normal benefit of accelerated spending. Too many of the transactions from those sectors will have shifted to the internet.

And, eBay will be in the cat bird’s seat as the wind moves around to its back

Douglas A. McIntyre

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