eBay: Operating smarter?

eBay's first quarter results were better than expected and the company argued that it is operating with more discipline and smarter. For the quarter ending March 31 (statement), the company reported net income of $357.

eBay's first quarter results were better than expected and the company argued that it is operating with more discipline and smarter. 

For the quarter ending March 31 (statement), the company reported net income of $357.1 million, or 28 cents a share, on revenue of $2.02 billion, down $171.6 million from a year ago due to poor performance in its marketplaces unit. On a non-GAAP basis, eBay reported first quarter earnings of $499.9 million, or 39 cents a share. 

Wall Street was expecting earnings of 33 cents a share on revenue of $1.94 billion. Meanwhile, the second quarter outlook was in line with estimates. Wall Street was projecting earnings of 35 cents a share on revenue of $1.98 billion. Here's what eBay promised for the second quarter. 

But the notable slide in eBay's conference call was this one:

 

eBay is arguing that it is operating smarter. Is it?

I'd give eBay a qualified 'yes' on operating improvements. To wit:

The big question is whether operating smarter will really help eBay in its battle with Amazon. eBay's quarter was relatively solid, but the picture is mixed. By the numbers:

  • The marketplaces unit---eBay, Shopping.com, StubHub, Kijiji---saw revenue fall 18 percent from a year ago to $1.22 billion. 
  • The payments unit revenue was $643 million, up 11 percent from a year ago. PayPal penetration was up as was Bill Me Later. 

  • But Bill Me Later may be a worry spot going forward. Notice charge-offs (eBay says the charge-offs were in line with expectations). 

  • Skype's first quarter revenue was $153.2 million, up 21 percent from a year ago. 
  • eBay ended the quarter with $3.06 billion in cash.