Ebay profit beats, shares jump after-hours

EBay Inc reported a stronger-than-expected quarterly profit and raised its full-year adjusted profit forecast, helping to allay concerns about the company's prospects following the spinoff of PayPal, its main engine of growth.

EBay, whose shares were up 7.9 percent after-hours on Wednesday, faces intensifying competition from rivals such as Amazon.com Inc as well as from retailers such as Wal-Mart Stores Inc that are boosting their online presence.

PayPal Holdings Inc, a leader in the fast-growing digital payment processing market, became a separate company on July 18.

"The worst case scenario kind of came off the table," Steve Weinstein, senior Internet and e-commerce analyst at ITG Investment Research, told Reuters.

"I think the Street was preparing for something really bad."

Instead, the company raised its forecast for adjusted profit from continuing operations for the full year to $1.80-$1.82 per share from $1.72-$1.77. Analysts on average were expecting a profit of $1.78 per share, according to Thomson Reuters I/B/E/S.

The increase reflects earnings performance in the second quarter as well as the repurchase of shares and a more favorable tax rate, the company said.

EBay's net income fell to $539 million, or 45 cents per share, in the third quarter ended Sept. 30 from $673 million, or 54 cents per share, a year earlier.

However, excluding items the company earned 43 cents per share, beating the average estimate of 40 cents.

Net revenue fell to $2.1 billion from $2.15 billion in the same quarter last year, but was up about 5 percent excluding the effect of changes in currency rates.

Analysts on average had expected revenue of $2.09 billion.

Gross merchandise volume fell 2 percent including the effect of currency rates but grew 6 percent on an forex-neutral basis.

Up to Wednesday's close of $24.21, eBay's shares had fallen about 13 percent since the close on July 17. PayPal's shares dropped about 18 percent.