Internet auction-house eBay’s profits were down in the first quarter, while Microsoft results followed a similar pattern, hurt by the weaker personal computer market.
eBay announced that its revenue declined 8% to $US2.02 billion, with earnings hurt by a weaker US dollar. About 54% of eBay’s business comes from international transactions.
The company announced that net profit was down 22% to $US357 million from $US460 million a year earlier.
Subsidiary payment service PayPal recorded an 11% rise in revenue, while voice over IP service Skype – which eBay has said will be spun-off in a public offering next year – saw revenue rise 21%.
But the company announced higher-than-expected outlooks for the second quarter, saying it predicts revenue to come in between $US1.85 billion and $US2.05 billion, higher than the Wall Street expectation of $US1.97 billion.
“Our guidance reflects weak consumer spending, tight cost controls and the negative impacts from foreign exchange,” eBay’s chief financial officer Bob Swan said in a statement.
Meanwhile, Microsoft has announced that its third quarter venue dropped by 6% to $US13.65 billion, while profit falling by a massive 32% to $US3 billion, from $US4.39 billion in the same period last year. The company blamed weaker personal computer and server markets.
The company included $US290 million in severance charges in the results, after it recently announced that up to 5000 positions will be shed from the company.
But while the company says it is confident about the rest of the year, and is particularly expecting a boost from the release of its new operating system Windows 7 rumoured around Christmas, it says weak conditions will continue.
“While market conditions remained weak during the quarter, I was pleased with the organisation’s ability to offset revenue pressures with the swift implementation of cost-savings initiatives,” said Microsoft CFO Chris Liddell in a statement.
“We expect the weakness to continue through at least the next quarter.”
The company expects operating expenses of between $US26.7 billion to $US26.9 billion including severance charges for the full financial year ending 30 June 2009.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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