EBay Income Up Sharply

The online auction company's 4Q income nearly quadrupled on the success of its PayPal operation and spin-off of Skype.
eBay's first quarter after spinning off its Skype unit helped the online retail and auction company report sharply higher profits. Its PayPal online payments operation and strong holiday spending also contributed to what analysts believe represents a turnaround for the firm.

The fourth-quarter results, which produced an 8% jump in eBay's stock price Thursday, roughly coincided with chief executive John Donahoe's second year at eBay's helm. eBay's PayPal online payments operation was a particularly bright spot.

"PayPal posted terrific results, significantly expanding its global presence," said Donahoe at an analysts meeting. "For the first time, PayPal's total payment volume (moved) past $20 billion in a single quarter. PayPal is truly a global business, now supporting 24 currencies in 190 markets with 81 million active accounts."

eBay reported net income of $1.4 billion versus $367 million in the same quarter in 2008; revenue for the quarter was $2.37 billion -- up from $2.04 billion in the year-earlier period.

The results were helped by eBay's spinoff of its Skype telecom calling unit after messy negotiations in which Skype's founders returned to the VoIP calling pioneer. The new Skype was sold for $1.9 billion and eBay is now a minority stockholder in Skype, with a 30% share.

Donahoe singled out eBay's soaring mobile phone business for special attention. "Mobile absolutely is in the phase of an inflection point," said Donahoe, "and there is no doubt that the iPhone and smartphones in general have just illustrated to consumers all over the world the power of what a mobile device can provide. We have been quite fortunate in that both eBay and PayPal lend themselves to the mobile format well."

Donahoe said eBay intends "to be all over" the mobile business in the future.