eBay's fourth quarter earnings were better than expected courtesy of mobile volume, PayPal and solid marketplace results, but the company's outlook for the first quarter was light. The company also detailed that investor Carl Icahn wants a PayPal spin-off.
The e-commerce company reported fourth quarter earnings of $850 million, or 65 cents a share, on revenue of $4.53 billion, up 14 percent from a year ago. Fourth quarter non-GAAP earnings were 81 cents a share.
Wall Street was expecting eBay to report fourth quarter non-GAAP earnings of 80 cents a share on revenue of $4.54 billion.
eBay also has detailed that it has an Icahn problem. The investor, who is quickly becoming a thorn in Apple's side, has nominated two of his employees to the board of directors and wants a PayPal spin-off. Icahn owns 0.82 percent of eBay, which has said that spinning off PayPal doesn't make sense. eBay said:
Regarding Mr. Icahn’s separation proposal, eBay’s Board of Directors routinely assesses the company’s strategic direction and has explored in depth a spinoff or separation of PayPal. eBay’s Board of Directors has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value. As part of eBay Inc., PayPal is able to leverage the company’s technology capabilities, commerce platforms and relationships with retailers, brands and large merchants worldwide. Payment is part of commerce, and as part of eBay, PayPal drives commerce innovation in payments at global scale, creating value for consumers, merchants and shareholders.
Maybe Apple and eBay can start a Carl Icahn support group.
As for the outlook, eBay said revenue will be $4.15 billion to $4.25 billion with non-GAAP earnings of 65 cents a share to 67 cents a share. That projection includes a 2 cents a share hit due to the Braintree acquisition.
Wall Street was expecting first quarter earnings of 72 cents a share on revenue of $4.3 billion.
For 2014, eBay said it expects revenue of $18 billion to $18.5 billion with non-GAAP earnings of $2.95 a share to $3 a share. Wall Street was looking for $18.5 billion with non-GAAP earnings of $3.11 a share.
eBay even served up a 2015 outlook and projected revenue of $20.5 billion to $21.5 billion. Wall Street was looking for revenue of $21.28 billion.
On a conference call, eBay CEO John Donahoe said:
The fourth quarter was a tough competitive holiday season in retail. It was also a holiday season that tipped toward the future of commerce, online mobile and other e-commerce capabilities have clearly taken hold. Consumers are changing how they shop and retailers and brands are having to adapt. In this dynamic environment, we feel good about our performance for the quarter. We focused on what we control, leveraging our global e-commerce platforms and mobile leadership and strengthening our operating discipline and execution. And it paid off with a strong finish to a challenging year.
Mobile continues to change commerce and blur the lines between online and offline. We have tremendous opportunities in the $10 trillion commerce market. We will continue to compete aggressively across all of our businesses and in 2014, we are stepping up our investments particularly in PayPal.
Overall, eBay's results are solid. Among the key points from the fourth quarter:
- Total mobile commerce volume was up 88 percent from a year ago. Mobile added more than 14 million customers.
- Payments revenue in the fourth quarter was $1.84 billion, up 19 percent from a year ago.
- Marketplace revenue was $2.3 billion, up 12 percent from a year ago.
- eBay Enterprise revenue was $392 million, down 2 percent from a year ago.
- The company ended the quarter with cash and equivalents of $12.8 billion.