5:40 PM
By Alexandria Sage
SAN FRANCISCO | Wed Jan 19, 2011 7:14pm EST
SAN FRANCISCO (Reuters) - Online marketplace eBay Inc provided investors with a bullish 2011 profit outlook after the holiday quarter showed signs it is delivering a promised turnaround, as improvements in its buyer experience helped boost sales at its marketplaces unit.
Its shares rose 2.4 percent after hours.
The company, which also owns fast-growing Web payments unit PayPal, exceeded Wall Street profit estimates for its holiday fourth quarter, helped by more items sold and at higher prices, and cited a "stabilized" macroeconomic environment.
"We're becoming a stronger, more competitive company," Chief Executive John Donahoe told analysts, citing innovation that has attracted more buyers due to a more convenient shopping experience.
"Customers shopped a dramatically different eBay in the fourth quarter of this year than a year ago. The shopping experience is now cleaner, faster and easier to navigate," he added.
EBay is in the last year of a three-year plan to turn around its marketplaces business, which connects online buyers with sellers.
"We were waiting for the turn and the turn has happened," said BGC Partners analyst Colin Gillis. "You see it in sold items as well as rebounding average selling prices. They're buying more items and they're also paying a bit more as well."
EBay, which pioneered the online auction, has hoped to prove that improvements to its site and user experience, including a more targeted search engine and daily deals, is encouraging traffic and delivering more consistent sales.
"Fourth quarter results and 2011 guidance should keep investors enthused about this name despite the recent run-up" in eBay's share price, said Jefferies analyst Youssef Squali, who also cited robust growth at PayPal and operating efficiency.
The stock was up 25 percent year over year at Wednesday's close.
For the full year, eBay expects adjusted earnings of $1.90 to $1.95 on revenue of $10.3 billion to $10.6 billion.
That compares with the $1.85 per share on revenue of $10.19 billion expected by Wall Street.
"As we enter 2011, we believe the overall macro environment has stabilized," said Chief Financial Officer Bob Swan.
EBay, like many companies dependent on consumer spending, had been hurt by economic uncertainty, posting tepid marketplaces sales as consumers cut back on nonessential items. But the company's third-quarter results showed momentum and executives cited stabilization of the U.S. market.
Net income for the fourth quarter was $559.2 million, or 42 cents per share, compared with $1.36 billion, or $1.02 per share, a year earlier.
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