Wall St. had low expectations for Ebay’s (EBAY) fourth quarter. For the period Ebay is expected to report earnings of $.39 a share on revenue of $2.1 billion, according to consensus estimates from FactSet Research. In the same period last year, Ebay posted earnings of $.45 on revenue of $2.18 billion.

The lack of enthusiasm shows. Ebay shares trade at just over $13, down from a 52-week high of $33.47.

Those who were prepared to be disappointed had their way. Ebay posted fourth quarter revenue of $2.04 billion. It posted net income on a GAAP basis of $367 million or $0.29 per share. EPS was off 29% from the same period in 2007.

Ebay’s core auction business was badly damaged. It has $1.27 billion in revenue, equating to a 16% year-over-year decline.

As expected, PayPal continued to do relatively well but not well enough to save the rest of the firm. The payment business had $623 million in revenue, an increase of 11% year-over-year. Net total payment volume for the quarter was $15.99 billion, an increase of 14% year-over-year.

Ebay’s odd step-child Skype had $145 million in revenue for the quarter, representing 26% year-over-year growth. Skype added 35 million new users during the quarter and ended the period with more than 405 million registered users. Since most Skype customers use the service for free, all those extra people represent more cost than revenue opportunity.

All in all, it was a dismal affair. The market beat Ebay’s shares like a rented mule, pushing them down over 6% after hours to $12.40.

Douglas A. McIntyre

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