In light of earnings, is eBay operating smarter?

As the online auctioneer brings in better-than-expected first-quarter results, it argues that it is increasing efficiencies and focusing on core strengths.

This was originally posted at ZDNet's Between the Lines.

eBay's first-quarter results were better than expected, and the company argued that it is operating with more discipline and smarter.

For the quarter ended March 31 (statement), the company reported net income of $357.1 million, or 28 cents a share, on revenue of $2.02 billion, down $171.6 million from a year ago due to poor performance in its marketplaces unit. On a non-GAAP basis, eBay reported first-quarter earnings of $499.9 million, or 39 cents a share.

eBay is outlining how it is indeed operating smarter. Click the image for a full chart. eBay

Wall Street was expecting earnings of 33 cents a share on revenue of $1.94 billion. Meanwhile, the second-quarter outlook was in line with estimates. Wall Street was projecting earnings of 35 cents a share on revenue of $1.98 billion.

eBay is arguing that it is operating smarter. Is it? I'd give eBay a qualified "yes" on operating improvements. To wit:

  • The spin-off of Skype indicates that there's more focus. It fetches a decent valuation;
  • The acquisition of Gmarket shows that eBay is doubling down on e-commerce;
  • eBay is also jettisoning bad acquisitions such as StumbleUpon.
  • The big question is whether operating smarter will really help eBay in its battle with Amazon. eBay's quarter was relatively solid, but the picture is mixed. By the numbers:

    • The marketplaces unit--eBay,, StubHub, Kijiji--saw revenue fall 18 percent from a year ago to $1.22 billion.
    • The payments unit revenue was $643 million, up 11 percent from a year ago. PayPal penetration was up, as was Bill Me Later. (Bill Me Later may be a worry spot, going forward, though eBay says charge-offs were in line with expectations.)
    • Skype's first-quarter revenue was $153.2 million, up 21 percent from a year ago.
    • eBay ended the quarter with $3.06 billion in cash.
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