EBay's Q4 performance caps company's best year yet

The results announced Wednesday served as the exclamation point on the best year yet for eBay Inc., an e-commerce pioneer founded in 1995 when the concept of buying merchandise online seemed absurd.

Online shopping has since become a staple for hordes of consumers, turning eBay into a thriving business and a Wall Street favorite.

But the growing popularity of smartphones and tablet computers is once again changing the way many people shop. EBay is trying to remain at the forefront of the shift by retooling its online bazaar and popular payment service, PayPal, to work better with mobile devices.

The company, based in San Jose, California, says its mobile applications have been downloaded onto more than 120 million devices, putting its services in easy reach of consumers even as they peruse the aisle of brick-and-mortar stores.

“Mobile is quickly becoming the new normal, and we are leading this new way consumers shop and pay,” eBay CEO John Donahoe told investors during a Wednesday conference call. He predicted that PayPal and eBay's marketplaces division, where most of eBay's shopping activity occurs, will each process more than US$20 billion in mobile transactions this year.

EBay doesn't keep all the revenue that passes through its services. PayPal charges merchants a fee to deliver payments from customers, and eBay collects fees for products listed and sold online.

The strides that eBay has made in the mobile market have impressed investors, helping to propel the company's stock price to a 68-percent gain last year.

The company's fourth-quarter performance provided another boost as eBay stock edged up 40 cents to US$53.30 in Wednesday's after-hours trading. The market's reaction was tempered by a management forecast for the current quarter that was slightly below analysts' expectations.

EBay earned US$757 million, or 57 cents per share, during the final three months of last year. That represented a 62-percent decrease from net income of US$2 billion, or US$1.51 per share, at the same time in 2011.

The 2011 numbers were inflated by a windfall from eBay's US$8.5 billion sale of online communications service Skype to Microsoft Corp.

If not for certain one-time items, eBay said it would have earned 70 cents a share. That figure was a penny above the average forecast among analysts surveyed by FactSet. The most recent quarter's earnings were up by 17 percent from 2011, on an adjusted basis.

Revenue climbed 18 percent from the previous year to nearly US$4 billion, in line with what analysts forecast.

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