Credit crunch bites Ebay

 

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By Stuart Turton

Posted on 22 Jan 2009 at 11:10

Ebay has seen revenue and profits drop, as even bargain hunters take cover during the credit crunch.

Net profit during the fourth quarter, typically Ebay's strongest period due to the Christmas holidays, fell to $367 million from $531 million for the same period last year.

Revenues were down 7% to $2.04 billion, significantly below the $2.11 billion expected by analysts. Ebay was particularly hurt by falling sales at its auctions sites, which were down 16% for the quarter.

Ebay has been increasingly pushing towards fixed-price sales, putting it into direct competition with industry giant Amazon. However, the company claims the economic environment rather than its strategy is to blame for falling profits.

"We've been operating in an almost unprecedented external environment," says Ebay chief executive John Donahoe. "There is no doubt that Ebay was impacted by the macro economy and our fourth quarter results reflect this."

There were a couple of bright spots for Ebay, with revenue at its Skype and PayPal divisions growing 26% and 11% respectively.

The company is forecasting revenue for the first quarter of 2009 to be between $1.8 billion and $2.05 billion.