SAN FRANCISCO (MarketWatch) -- EBay Inc. managed to swing a strong increase to its bottom line for the first quarter thanks to growth in its ticketing, payments and telecommunications units, while the company's core auction business continues to show signs of weakness.
The online auctioneer (EBAY: 32.18, +0.60, +1.9%) reported a 22% gain in net income for the quarter while overall revenue grew 24%, beating Wall Street's estimates. The company also issued a better forecast than expected for the second quarter as well as the remainder of the year.
For the first quarter, earnings came in at $459.7 million, or 34 cents a share, compared with earnings of $377.2 million or 27 cents a share for the same period last year.
The PayPal unit continue to shine, growing revenue 32% for the quarter.
Excluding charges related to stock options and acquisitions of intangible assets, eBay said that earnings for the quarter would have been $561.5 million, or 42 cents a share, for the first quarter. Analysts were expecting earnings of 39 cents a share for the period, according to estimates tabulated by FactSet Research.
Revenue for the quarter came in at $2.19 billion compared with $1.77 billion the previous year, beating expectations for $2.07 billion in revenue.
Shares of eBay, which have risen more than 20% in the weeks leading up to Wednesday's report, fell XX% in after-hours trading. The stock closed the regular session up almost 2% at $32.12.
Auctions still slow
The company's core marketplaces unit -- which accounts for about two-thirds of total revenue -- grew 19% from last year's first quarter. In a statement, eBay credited the growth to advertising and its classified-ads business as well as StubHub, a secondary ticketing service acquired early last year.
Chart of EBAY
The core auction business, however, is still showing signs of weakness following a major shake-up to the company's fee structure earlier this year.
Gross merchandise volume -- the total dollar volume of goods sold over its site -- reached $16.04 billion, up just 12% from the same period last year. That's flat with the growth rate in the previous quarter and down from the 14% growth seen in last year's first quarter.
"We are seeing some positive early indicators based on our key initiatives, but there is still much work to be done," eBay Chief Financial Officer Bob Swan said in a statement.
By contrast, the company's PayPal unit continue to shine, growing revenue 32% to $582 million for the quarter.
Internet-telephony unit Skype grew its revenue by 61% during the quarter to come in at $126 million. EBay acquired it with much fanfare in 2005 for about $2.6 billion, but wrote off more than $1.4 billion of the acquisition last year as an impairment charge.
Outlook better than expected
For the second quarter, eBay said that it expects earnings to come in between 39 cents and 41 cents a share, excluding charges. Revenue is expected to come in between $2.1 billion and $2.15 billion.
Analysts had been expecting earnings of 39 cents a share on revenue of $2.1 billion for the period, according to FactSet data.
For the full year, eBay expects earnings between $1.70 and $1.75 a share compared to estimates of $1.66 a share by analysts. Revenue is expected to be between $8.7 billion and $9 billion, compared with expectations of $8.77 billion. End of Story
Dan Gallagher is MarketWatch's technology editor, based in San Francisco.
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