Preview - EBay, PayPal seen beating mobile forecasts

SAN FRANCISCO Sat Jan 12, 2013 4:11am IST

A QR code is seen on goods for sale during the launch of a temporary ''pop-up'' Christmas shop run by online giant eBay on Dean Street in Soho, central London November 29, 2011. REUTERS/Neil Hall/Files

A QR code is seen on goods for sale during the launch of a temporary ''pop-up'' Christmas shop run by online giant eBay on Dean Street in Soho, central London November 29, 2011.

Credit: Reuters/Neil Hall/Files

Related Topics

Stocks

   
Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

SAN FRANCISCO (Reuters) - While much of the tech world is struggling with the switch to mobile devices, eBay Inc (EBAY.O) and its PayPal online payments division likely had a strong holiday season as more consumers used eBay's apps and PayPal's mobile payment service to shop.

EBay and PayPal forecast mobile transaction and payment volume of $10 billion for each business earlier in 2012 and they are likely to exceed that guidance when eBay reports results on Wednesday, according to analysts and investors.

"The surprises are going to be on the upside on these numbers," said Bill Smead of investment firm Smead Capital Management, which has almost 7 percent of its assets in eBay shares.

Some of the world's largest tech companies, including Microsoft Corp (MSFT.O), Google Inc (GOOG.O) and Facebook Inc (FB.O), grew during the era of the desktop computer and are now scrambling to adjust to the smaller screens of smartphones and tablets that have less room for lucrative ads.

In contrast, eBay and its main rival Amazon.com Inc (AMZN.O) do not rely as much on ads and are benefiting as mobile devices spur more online transactions.

"Mobile is serving as a catalyst for overall e-commerce," Heath Terry, an analyst at Goldman Sachs, wrote in a note to investors on Friday.

He raised his fourth-quarter eBay revenue estimate slightly to $4.06 billion and bumped his price target on the shares to $63 from $56.

Wall Street as a whole expects eBay to make 69 cents a share on revenue of $3.97 billion in the fourth quarter, according to Thomson Reuters I/B/E/S.

NEW SHOPPERS

EBay said in a blog this week that roughly 1.8 million new customers joined its online marketplace through a mobile device in the first three quarters of 2012, breathing new life into a business that was losing e-commerce market share a few years ago.

Smead's 53-year-old wife Becky was one of those new shoppers. The fund manager bought her an Apple Inc (AAPL.O) iPad two years ago when she was "computer illiterate." This Christmas she used the tablet for a lot of her shopping, snapping up gifts on eBay.com and paying with PayPal.

"She's gone from not ever using a computer to having email, Facebook and looking, finding and buying things online in two years," Smead added. "That's a powerful underlying current."

PayPal, the online payments business, benefits as more people shop on eBay.com because it is the preferred way to pay on the website. However, PayPal's mobile payment apps have given the business an extra growth spurt lately, beyond eBay.com.

In a recent blog, PayPal said global mobile payment volume almost tripled on the crucial holiday shopping days of Thanksgiving, Black Friday and Cyber Monday, compared to the same days a year earlier.

"The shift to mobile has had a lot of impact on eBay and PayPal, especially this holiday, and we will see that as they report fourth-quarter results," said Gil Luria, an analyst at Wedbush Securities. "It's quite likely they will exceed their already-raised goals of $10 billion in mobile volume for each of those businesses."

Wedbush surveyed online shoppers during the holiday season and found that when they were on a PC they visited 10 or more retail sites. When they were on a mobile device, they visited just three, two of which were eBay and Amazon.

"So the more people shop on mobile, the more they are likely to shop on eBay," Luria said.

PayPal also got a mobile boost. Shoppers surveyed by Wedbush used PayPal 21 percent of the time they were buying on a PC and 24 percent of time on a mobile device.

"That's almost a 15 percent increase as people shift from PC to mobile, which is very significant for PayPal," Luria said.

PayPal is popular online because shoppers do not have to type in credit card numbers and address details when completing purchases. That convenience increases on a mobile device, which is harder to input such detailed information, Luria said. (Editing by Will Dunham)

FILED UNDER:

Restricting Monopoly

Tech Showcase

"App Graph"

"App Graph"

Twitter to start tracking users' mobile apps  Full Article 

Internet Devices

Internet Devices

Internet-connected device sector deals accelerating, report finds  Full Article 

Google in Europe

Google in Europe

Insight - Behind Google's Europe woes, American accents  Full Article 

Uber Lawsuit

Uber Lawsuit

Uber CEO must turn over emails in gratuity lawsuit, U.S. judge rules  Full Article 

Wikileaks Hacker

Wikileaks Hacker

Icelandic hacker says guilty of stealing money from Wikileaks  Full Article 

Motorola Case

Motorola Case

U.S. court rejects Motorola Mobility price-fixing appeal  Full Article 

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage