eBay execs shed more light on Q2 hacking, look toward recovery

eBay execs shed more light on Q2 hacking, look toward recovery

Summary: Despite early glimmers of recovery already, eBay's CFO lamented that “the Marketplaces business has to dig itself out of a hole."

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Even though eBay managed to squeak out better-than-expected earnings after the bell on Wednesday, the impact was still obvious on the balance sheet.

"The cyber attack clearly impacted eBay’s performance in the second quarter,” admitted CEO John Donahoe during the quarterly shareholders call.

Donahoe asserted that eBay was performing above expectations for at least the first half of the second quarter.

"As John indicated, we got off to a good start, but we hit significant obstacles late May,” concurred eBay chief financial officer Bob Swan.

That month, the San Jose-headquartered corporation discovered unauthorized access on its network. Specifically, an eBay database hosting non-financial eBay user information, such as encrypted passwords, had been compromised.

Donahoe reassured there has been no evidence that the passwords were breached in any way. But it was the company’s “responsibility” and “right decision,” he continued, to ask sellers and buyers alike to change their passwords regardless.

The next step for eBay is to focus on recovery.

Donahoe cited approximately 80 percent of buyers have since changed their passwords, but not everyone in that pool has demonstrated previously seen activity levels.

"We're stepping up targeted marketing efforts in the second half to fully reengage these and other users who have not yet reset their password,” Donahoe said.

Swan outlined some of the measures eBay has taken to fuel re-engagement, such as coupling, seller incentives, and increased marketing spend.

"We began to see some recovery in the first half of July,” said Swan, positing that thanks to PayPal and the enterprise unit, eBay should be back on track to double-digit growth soon.

Yet, Swan also lamented that “the Marketplaces business has to dig itself out of a hole."

Furthermore, eBay was forced to cut its annual revenue guidance range by roughly $200 million as a result of the security breach and its lasting impact.

For the current quarter, analysts are expecting earnings of at least 71 cents per share on a revenue of $4.42 billion.

eBay followed up with a slightly softer revenue guidance range between $4.3 billion and $4.4 billion with earnings projected to fall between 65 and 67 cents a pop.

For the year, eBay's revenue forecast calls for a range of $18 billion to $18.3 billion with earnings between $2.95 and $3.00.

Topics: E-Commerce, Data Management, Privacy, Security, Tech Industry

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6 comments
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  • Scapegoat Hackers for bad Sellers policy

    EBay has instituted a new Detail Sellers Rating (DSR) and the new Search algorithm, Cassini that rewards large institutional sellers and knock-off Chinese goods by giving them priority and visibility on Ebay listings but hurt small and casual sellers. In the past both large and small casual sellers were treated equally on EBay. This system penalizes the casual market by lowering visibility on the auction listings. I used to get 20 looks and sales but I lucky I got 7. Many small sellers have given up. The tere is the matter of purging 15,00 sellers accounts.
    Richardbz
    • how to ebay

      Theres tons on how to ebay sell.
      You can get the same listing priority by offering buy-it-now and free postage. The power seller priority is a bit harder to get, but then it rewards sellers who sell more and that's the way it should be.
      My best advice is to list non buy-it-now at 99c so you get the most watched and that will get you the most audience during the critical last minute auction battle before item close.
      The problem is most sellers do it wrong and think it is a dumping ground for unwanted or faulty stuff and it's never going to favour casual sellers.
      I simultaneously list on ebay and other sites like gumtree and I cancel the ebay auction when I sell on other sites.
      My sales on ebay has dropped a lot because I offer the same items for 10% less as I don't have to pay ebay and paypal fees.
      Ebay fees are killing ebay sellers, and ultimately driving casual sellers away from ebay.
      warboat
  • Ebay isnt the same like it used to be

    If you are looking to buy something, you are perfect on Ebay. If you want to sell stuff, trying to sell anything is an adventure. Ebay is downright terrible for selling things, I have been scammed, I have been inundated with fees, I have had stuff damaged and taken advantage off, my funds in PayPal were questionably held for many days. There is just too much risk and fees to sell on Ebay now.
    Pollo Pazzo
    • things are not perfect as anbuyer either

      Most of my buying experiences have been good, but it only took two negative experiences to turn me off the service. Both were from hacked accounts posting auctions and still using eBay money transfer services. The real problem was how poorly eBay tried to treat me after they confirmed the accounts were hacked and the postings were fraudulent. It was unacceptable to try to hold my money for several weeks when I used their payment service.
      Emacho
    • I cannot think of a more efficient site to sell things than ebay

      If you are a genuine seller and not someone trying to dump unwanted and faulty crap and expecting a miracle return.
      Ebay has payment and postage integration second to none.
      It has the the best feedback system with blocking facilities.
      The only thing better is finding a buyer that will come to you, pickup and pay cash.
      Any other way of selling online is pure unregulated wild wild west.
      warboat
  • Ebay is indeed the best

    I have been doing all my purchases from ebay lately.
    wendybeltran