Holiday success makes eBay earnings sparkle

It appears to be smooth sailing at the e-commerce company, as better-than-expected fourth-quarter earnings seem to validate that its handling of PayPal and mobile commerce is working.

High activity during last month's holiday season, as well as continued strong growth from PayPal, meant that e-commerce giant eBay had some rather nice numbers to report in its 2010 fourth-quarter earnings on today. Revenue was up 10 percent year-over-year if you don't count Skype, which eBay spun off late in 2009 , and profits were up 24 percent. Analysts were expecting a profit of 47 cents a share; eBay posted 52 cents.

The company reported "strong holiday shopping momentum" as the year drew to a close, propelled in part by its focus on mobile commerce and areas of the online shopping world that it had largely not yet tapped, like fashion.

"We delivered a strong fourth quarter and a solid year, driven by our customer focus, commitment to technology-led innovation and our operating discipline, which is enabling us to reinvest in growth," CEO John Donahoe said in a release. "We are driving strong global growth at PayPal and strengthening our core eBay business. And we are innovating quickly in areas such as mobile, which is helping to position us at the forefront of trends shaping the future of shopping and payments."

Transaction system PayPal continues to grow, eBay reported. It's adding 1 million new active accounts per month, and nearly half its fourth-quarter revenue was generated outside the U.S. PayPal is also an option in coffee conglomerate Starbucks' new mobile payment app, potentially exposing it to new customers in the process.

But eBay also has, depending on how you see them, areas that are either weak spots or potential sources of growth. Though it offers deals and discounts to members via e-mail and on its Web site, eBay has not made nearly as much of a move into the current daily-deals craze (fueled by the lightning-fast rise of Groupon) as some other commerce companies. Amazon, for example, acquired fire-sale site Woot last year and made a big investment in Groupon rival LivingSocial , the fruits of which were all over Web chatter today when a LivingSocial deal for Amazon gift cards earned it plenty of positive buzz.

About the author

Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.

 

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