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eBay's second quarter outlook disappoints

EBay's first quarter earnings were solid relative to expectations, but the outlook for three months ending June 30 disappointed.

EBay's first quarter earnings were solid relative to expectations, but the outlook for three months ending June 30 disappointed.

The e-commerce giant said that its second quarter revenue will be $2.15 billion to $2.2 billion with earnings excluding charges of 37 cents a share to 39 cents a share. Wall Street was expecting earnings of 40 cents a share on revenue of $2.21 billion.

For 2010, eBay projected revenue of $8.8 billion to $9.1 billion with non-GAAP earnings of $1.63 a share to $1.68 a share. Wall Street was looking for $1.67 a share on revenue of $9.12 billion (statement).

Simply put, the outlook wasn't that far off, but enough ding eBay shares after hours.

The outlook overshadowed a solid first quarter for eBay. The company reported earnings of $397.7 million, or 30 cents a share, on revenue of $2.2 billion, up 9 percent from a year ago. Like previous quarters, PayPal carried the quarter. Non-GAAP earnings were 42 cents a share, a penny better than expectations.

Add it up and eBay is a cash cow that's struggling to grow in its core business, but can juice growth with PayPal, which is a dominant platform.

By the numbers:

  • Revenue for eBay's payment business---PayPal and Bill Me Later---reported first quarter revenue of $809.3 million, up 26 percent from a year ago.

  • Marketplace revenue---eBay, Shopping.com and StubHub---had revenue of $1.4 billion, up 13 percent from a year ago. The company said that the marketplace turnaround is on track. And fixed-price sales showed momentum.