A blue Christmas for eBay

Slower consumer spending hurt eBay's results for its fiscal fourth quarter and depressed its forecast for Q1 2009.

The online transaction provider's earnings call on Wednesday detailed life in a climate where, as CEO John Donahoe noted glumly, e-commerce itself is trending down for the first time ever.

As one would expect from a retailer, normally the last months of the year are the biggest months of the year for eBay. But year-over year net income for eBay was down for Q4 -- $367.2 million down from $530.9 million year-over-year, for the company's first-ever year-over-year quarterly decline. Non-GAAP EPS was 41 cents. Revenue overall was $1.72 billion, down 7%.

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Donahoe recapped the progress on his ambitious list of changes to eBay itself, which he described at the beginning of 2008. Though the company has, as he put it, "a lot of work to do," he pointed to advances in security, improvements in site design and the user experience, and the balance between instant purchases and auction-style purchases as several of the aspects of the eBay shopping experience that have improved despite the strange economic scene.

PayPal's making advances too -- its merchant-services business is now a genuine billion-dollar entity, and for the first time the payment service saw more usage beyond eBay than for eBay purchases. Revenues at PayPal are up 11%, and PayPal represents around 30% of the company's total revenues. As for Skype, revenues are up 26%. (And Donahoe got to retell the Biden family's charming anecdote about video-Skypeing with their son, deployed in the Middle East, backstage on Election Night.)

A somewhat beleaguered-sounding Donahoe emphasized that they're in it for the long haul, and though they "have a lot of work to do in [their] core eBay business," the portfolio's still powerful -- and, he said, is still undercredited in the value of the company. (Possible translation: Please stop looking at Skype like that.) The number of active users globally stands at 86.3 million.

Going forward, eBay's guidance was frankly a bit disheartening. The company predicts adjusted Q1 earnings for of between 32 and 34 cents per share, with revenue somewhere between $1.8 billion and $2.05 billion. That's 6-8 cents/share below analyst predictions.

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