Ebay revenue to decline for first time
Ebay predicted on Wednesday that its revenues would decline for the first time in its 13-year history, as it slashed its financial projections for the rest of this year in anticipation of a sharp pull-back in internet commerce.
At the same time, Ebay said it had already suffered its first decline in the value of goods sold on its sites in the third quarter of this year as it struggled with a belated attempt to adapt its markets to changes in online consumer behaviour.
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The company's shares, which were already 56 per cent down from their high of the past 12 months, tumbled nearly 18 per cent amid the broader stock market rout on Wednesday.
John Donahoe, chief executive, said Ebay would face a "very challenging" business environment for the foreseeable future, with the crisis in financial markets already feeding through directly into the health of its online markets.
"This is impacting consumer spending and e-commerce growth rates," he said.
Ebay's revenue growth rate fell to 12 per cent in the three months to the end of September, according to figures released on Wednesday,compared with 30 per cent a year before.
That would turn negative in the fourth quarter, the company predicted, with revenues of between $2.02bn-$2.17bn for the final three months, below the $2.181 it recorded in the year-ago period. The new revenue forecast is roughly 13 per cent below the company's earlier guidance.
For the third quarter, Ebay said that gross merchandise volume - the value of goods traded on its markets - had fallen 1 per cent from a year before, to $14.28bn.
"Buyer and seller expectations have been rising, and we have not kept up," Mr Donahoe said.
He added that recent changes to how Ebay's markets operate would eventually bear fruit, but said: "Frankly, some of these changes were overdue."
Ebay's overall performance in the latest quarter once again benefited from the rapid growth of its PayPal division, which reported revenue growth of 27 per cent and now accounts for 28 per cent of overall revenues.
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