Google, eBay results leave markets cold
Friday, 18 July 2008
Mike Preston
Google and eBay have both taken a hit to their share prices, despite announcing double digit quarterly earnings growth yesterday.
Google reported net revenue growth of 35% to $US1.28 billion for the June 2008 quarter. The result fell below market projections – something that has happened very rarely in recent years– triggering a 12% fall in its share price to $US477.00, although it recovered much of that overnight.
A massive lawsuit launched against Google by entertainment giant Viacom for IP violations on YouTube was a factor in the result, helping boost expenses by almost 50%.
Google earned 66% of its revenue from its own ads and 31% from its ad networks on external sites.
eBay experienced a similarly subdued response to its announcement of a 22% lift in June quarter net income to $US460 million, a result that saw its shares fall 13% overnight.
The main cause of the lower than expected earnings was a 6% drop in the average value of items purchased through eBay, a result blamed on weak economic conditions in the US.
But the company was talking up the performance of PayPal, the online payment system that until recently it planned to make compulsory for Australian eBay users.
PayPal revenue increased 33% to $US602 million and, according to eBay chief financial officer Robert Swan, the company sees plenty of earning potential in the system.
“The future is almost limitless in terms of what we can do,” Swan told Bloomberg. “We have the unique ingredients, characteristics, technologies and capabilities to dramatically expand PayPal on eBay, off eBay, and beyond payments.”
Read more on eBay and Google
Advertisement
