eBay Inc. (NASDAQ:EBAY) has announced its earnings for the first quarter of 2012 today. The company revealed that it earned $0.44 per share in the period on revenues of $3.28 billion. Analysts had expected the company, which hosts the world’s most popular online market place, to announce earnings of $0.52 per share and revenues of $3.15 billion. In th same quarter of last year the company posted earnings of $0.36 per share while taking in revenues of $2.5 billion. Online commerce is still a growing market and it is important to see whether or not eBay, the old reliable, can grow along with some of the newer companies or whether it will gradually be left behind. Today’s results are a positive step in that direction
In the last quarter of 2012 the company put together earnings of $0.60 per share on $3.4 billion, that having been the holidays, the best time of year for retail, it is not surprising the company failed to beat those expectations. eBay’s own estimates for this quarter were earnings of $0.51 per share. The company is still performing quite strongly however and there will be little doubt as to the firm’s continued success in online commerce.
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eBay provides a platform that allows regular people or businesses to sell directly to their customers on a universal online market place. The company also owns the largest online payment provider service, Paypal. Compaetition in the sector comes from all over the place as online retail has exploded in recent years. The main threats facing eBay are more traditional online stores like Amazonewhich worls as an online department store. eBay has always struggled with branding, a tool most sellers find useful, and Amazon’s brand has only gotten stronger in recent years.
One of the online marketplace’s biggest worries is the commercialization of Facebook which can offer much more to retailers in terms of advertisement and marketing knowledge than eBay can. Such a growth in commerce on Facebook’s platform, the ability to actually sell items on the firms pages has been talked about before, would really have a negative effect on eBay. The site could once again be relegated to the simple car boot sale domain that it originated as.
Because of eBay’s size in the online retail market its performance can be used as a proxy for the overall health of online commerce. From this report that sector looks strong and should continue to grow as the market draws in more people. Key among the problems in attracting more people to the arena is increasing the ease of payment online, something Paypal has specialized in in the last few years, and security concerns. eBay has not been the particular victim of security attacks but their aura rubs off throughout the web.