EBay CEO sees more change ahead after profitable 1st quarter

More change is in store at eBay, its CEO said after the online auction company reported its profit climbed 22 percent in the first quarter despite anger from its sellers over fee and feedback adjustments.

"I anticipate a year that's going to be a fairly vocal year because I think we are going to make a number of changes," Chief Executive John Donahoe told The Associated Press Wednesday, adding that the company could have handled concerns better.

"I think in (the first quarter), we did a good job, not a great job, in the way we engaged with our community," Donahoe said.

Users can expect more rejigging of the fee structure, more refinements to eBay's search functions and more payment guarantee initiatives at PayPal.

The company in the first quarter made several modifications aimed at boosting listings, improving buyers' experiences and freeing the site of fraud. Besides making changes in fees and in the feedback it gathers about buyers and sellers, eBay added a 20-day hold on payments for certain items through PayPal, which drew an outcry from sellers.

The company's growth has slowed amid mounting competition from e-commerce sites like Amazon.com.

But it benefited in the first quarter from the weak dollar and beat Wall Street's expectations. It also raised its outlook for the rest of the year.

EBay reported net income of $460 million, or 34 cents per share, on revenue of $2.19 billion in the quarter that ended March 31. In the year-ago quarter, eBay earned $377 million, or 27 cents per share, on revenue of $1.77 billion.

Excluding one-time items, eBay's net income was $562 million, or 42 cents per share, compared with $460 million, or 33 cents per share, in the first quarter of last year. On that basis, analysts polled by Thomson Financial expected, on average, earnings of 39 cents per share on revenue of $2.08 billion.

More than half of eBay's business — including its core online auction, fixed-price and store listings, PayPal, Skype and classifieds — takes place overseas. Sales in stronger foreign currencies translate to more dollars for eBay.

EBay raised its outlook for 2008, saying it expects revenue between $8.7 billion and $9 billion with earnings per share between $1.35 and $1.40. Excluding special items, it expects earnings per share between $1.70 and $1.75.

The company said it repurchased 37 million shares of its stock during the first quarter at a cost of $1 billion.

The number of listings on the site grew 10 percent compared with the year-ago quarter, continuing growth seen in the fourth quarter, which came after two quarters of declining listings, as measured year over year.

Growth in active users, however, remained flat at 1 percent over the year-ago quarter, down from 10 percent last year compared to the year before.

The growth rate for the total value of goods for sale on eBay, or GMV, was down slightly at 12 percent, versus 14 percent a year ago.

Analyst Tim Boyd with American Technology Research said the numbers are strong overall, but the lag in key growth metrics could be a symptom of recession.

"The market was definitely hoping to see some of these key metrics turn around," Boyd said. "What is negative is the fact that GMV growth did not accelerate, so people wanted to see that 12 percent growth go to 14 or 15 percent growth, and it didn't get there even with a lot of currency help."

The San Jose-based company also raised its outlook for the current quarter, for revenue between $2.1 billion and $2.15 billion, with earnings per share between 30 cents and 32 cents. Excluding one-time items, it expects earnings per share between 39 cents and 41 cents in the second quarter.

Shares fell 4.2 percent, or $1.35, to $30.77.