When Profits And Revenues Diverge
October 21, 2009 by Tisa Silver
Filed under Finance
Yesterday, after reading Yahoo’s earnings release, I wrote about the income statement and which line, top or bottom, means the most.
Today, eBay (EBAY) reported third quarter results which beg the question once more, but with an earnings scenario that is the exact opposite of what Yahoo reported. Perfect timing!
Photo by rightonbro, courtesy of flickr
EBay reported net income of $350 million on revenue of $2.24 billion. Net income fell 29 percent versus the same period last year, but revenue rose 6 percent.
I am a fan of eBay because it has changed the marketplace forever. Unfortunately, eBay’s net income and revenues moved in opposing directions.
According to Yahoo! Finance, the decrease in net income is partially due to currency fluctuation and a unique tax benefit reported in the third quarter of last year.
The increase in revenue came from multiple streams. PayPal and Bill Me Later saw an increase of 19 percent in active user accounts, eBay also saw an increase in users (2 percent), and its gross merchandise volume rose 7 percent to $12.2 billion.
So, top line or bottom line, which one means more with eBay today? Shares of eBay fell 5 percent in after-hours trading. Looks like the bottom line wins tonight.
BTW- Shares of Yahoo continued to climb today, rising 2.8 percent during regular trading.
