EBay sees growing risks to business in coming year

By Eric Auchard

SAN FRANCISCO (Reuters) - Online auction leader eBay Inc warned in an annual report on Friday that it faces difficulty getting former customers to return, adding to the normal challenge of attracting new users to its sites.

In its annual shareholder filing with the U.S. Securities and Exchange Commission, eBay cited a variety of new threats to its business that reflect "changing customers demands."

EBay acknowledged that its main auction business faces slowing growth in each of its top three markets.

"We face challenges in the U.S., U.K. and Germany, which are our three largest markets, as growth of listings, active users and GMV on the eBay.com platform in those countries has slowed," the company said in the regulatory filing.

GMV is gross merchandise volume, the total value of goods and services sold on eBay sites -- on which eBay takes a cut in the form of transaction fees.

Adding to the risks in the coming year is expected weaker consumer spending in each of these three major markets, it said. At the same time, overall growth in the e-commerce market is expected to continue to decelerate, the company cautioned.

Wall Street analysts, on average, expect eBay this year to earn revenue of $8.7 billion, a rise of 14 percent on 2007.

EBay revenue has suffered a dramatic slowing of growth in recent years -- down from rates of 30 percent to 40 percent.