Any minute now, eBay
The blended results are decent. Revenue climbed 10% to $2.2 billion if you eliminate Skype from the equation. Similarly adjusted, earnings climbed 14% to $0.40 a share. The results clocked in just ahead of Wall Street expectations, though they basically represent PayPal performing double duty.
PayPal remains the best -- and perhaps only -- reason to buy into eBay these days. There's a reason why CEO John Donahoe labeled performance "great" while stretching to give eBay a mere "stable" tag. PayPal's revenue soared 22% during the period, fueled by a 26% spike in payment volume.
It's a different story at eBay.com, as marketplace revenue barely kept up in its footrace against inflation. Revenue climbed 3%, and one would imagine that some of marketplace's components such as StubHub and South Korea's Gmarket helped lift up eBay.com.
There's a problematic growth deceleration trend here. Year-over-year revenue growth at eBay's marketplace arm has grown 17%, 13%, 12%, and now 3% during the past four quarters, respectively. A reversal during the current quarter won't be easy, since it will be pitted against last year's 17% advance.
It's not as if eBay can buy its way out of this, even though it closed out the quarter with $6.1 billion in cash and non-equity investments. Marketplaces and auction sites are moving toward free -- or nearly free -- models domestically. It can find growth abroad. Maybe it can take a larger position in Latin American dynamo MercadoLibre
Other buying opportunities exist in broadening its reach. It can venture out of the consumer space through surplus auctioneer Liquidity Services
Either way, the clock is ticking if eBay can't reverse the decelerating growth at eBay.com organically. Sure, the market likes the report because it's a beat on the bottom line, but what will eBay do when PayPal ultimately slips?
The market's happy with you, eBay, but I expect better.
Is there anything that eBay.com can do to get back on track? Share your thoughts in the comment box below.
Copart and MercadoLibre are Motley Fool Rule Breakers selections. Copart, eBay, and Liquidity Services are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a bull call spread position on eBay. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.
Longtime Fool contributor Rick Munarriz is a satisfied eBay user with 178 positive feedbacks to show for it. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.