Friday, January 21, 2005

eBay Finally Tumbles

Tumbled isn't really the right word--crash is more like it. After blowing margins away for I can't-count-how-many-quarters, the king of online auctions missed earnings Thursday. eBay stock fell close to 20 points Thursday. So what happen?
The e-commerce sector overall is healthy, but eBay's growth might be slowing, said Martin Pyykkonen, an analyst for Janco Partners. "I don't think eBay mirrors the entire e-commerce sector," he said. "For eBay, there are some signs of saturation. Many people that are going to (use the service) are already there." EBay executives said they lowered the outlook in the face of rising costs for marketing and aggressive offshore expansion. The company hopes to build offshore revenue to offset falling growth rate here. EBay said it spent 29% of revenue on marketing in the fourth quarter, its highest percentage since 2002.

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