California-based eBay takes first-quarter loss on substantial tax charge
By Mae Anderson, AP
May 1, 2014, 12:03 am TWN
NEW YORK--San Jose-headquartered eBay recorded a loss in the first-quarter due to a hefty tax charge on foreign earnings, but revenue jumped in part because of its thriving PayPal payments business.
Adjusted results beat expectations but the company offered weak second-quarter guidance and shares fell 4.5 percent in aftermarket trading.
The results come as PayPal, which eBay bought for US$1.3 billion in late 2002, gained 5.8 million new active registered accounts to end the quarter up 16 percent to 148 million.
The business is now growing faster than the company's core e-commerce site: Payments revenue rose 19 percent to US$1.85 billion, about 43 percent of total revenue. Meanwhile, its core marketplaces revenue rose 10 percent to US$2.16 billion.
The business also was the subject of an acrimonious tussle between eBay and billionaire activist investor Carl Icahn earlier this month. Icahn, who owns about 2 percent of eBay's shares, said repeatedly that the company should spin off all or part of PayPal. But eBay has said the company is better as a whole.
Icahn ultimately said that he would drop the PayPal strategy and withdraw his proposal to put two nominees on the board. In return, eBay will make David Dorman, chairman of CVS Caremark Corp. and founding partner of Centerview Capital Technology, the 10th independent director on the 12-member board. But Icahn said he still believes eBay should spin off PayPal and said in a statement that he'll seek confidential talks with the company.
"Our company is better together for now," said CEO John Donahoe. "EBay and PayPal are both great businesses, and they support and reinforce each other."
Overall, eBay lost US$2.33 billion, or US$1.82 per share, in the three months that ended March 31. That compares with net income of US$677 million, or 51 cents per share, last year. Excluding a US$3 billion tax charge, net income totaled 70 cents per share. Analysts expected net income of 67 cents per share.
The tax charge relates to freeing up about US$6 billion in available cash in the U.S. to increase "financial flexibility."
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