eBay Inc. (NASDAQ: EBAY) has just found out exactly what it feels like to be stock with a still inexpensive multiple that sells off after a mixed earnings report. As this had rallied nearly 200% from trough to peak in the bear-bull cycle of the last fourteen months, this may not be any surprise. The online auction (near) monopoly posted an 11% gain in profits. It earnings were $397.7 million, or $0.30 EPS, versus $357.1 million, or $0.28 EPS, a year ago.
More importantly, its non-GAAP earnings outside of those pesky charges were $0.42 EPS, just above the $0.41 consensus estimate from Thomson Reuters. Non-GAAP operating margin decreased slightly to 30.6% for the quarter, a drop of 0.1% from a year ago.
Revenues rose 9% on a normalized basis to $2.2 billion, which was effectively in-line with estimates. Auction winners and auctioneers sure seem to be yelling “winner, winner, chicken dinner!” more and more. Winners have spent more on the eBay site and via the PayPal service in Payments and Marketplaces.
Outside of just meeting or beating estimates, the problem is in the guidance. It sees $0.37 to $0.39 EPS on revenues of $2.15 to $2.2 billion in revenues for the next quarter, short of the $0.40 EPS and $2.21 billion target from Thomson Reuters.
eBay is also laying out its targets for fiscal-2010 at $1.63 to $1.68 EPS on $8.8 billion to $9.1 billion in revenues. Thomson Reuters consensus data is $1.67 EPS and $9.12 billion in revenue.
After the run-up we have seen, this drop after the close is of little surprise even if the stock does offer some relative value for those who prefer under-market earnings multiples. eBay closed down 0.4% at $26.29, but the stock is down 8.4% at $24.07 in after-hours trading.
JON C. OGG
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