News: Is eBay on Santa’s List?

Source: BusinessWeek Online

If eBay is any indication, this holiday season could be more of a nail-biter for e-commerce companies than most folks had expected. On the surface, you wouldn’t think so: The online marketplace reported results on Oct. 19 that met analysts’ third-quarter profit and sales expectations, hiking profits 40%, to $255 million, or 18 cents a share, as sales jumped 37%, to $1.11 billion. eBay even upped its fourth-quarter revenue forecast by $10 million, to $1.27 billion.

That hardly seems like grounds for worry, but eBay investors wanted more — specifically, higher profit targets for the crucial holiday quarter and beyond.

Mild as eBay’s disappointment was, it could throw a shadow over what had been shaping up as a promising quarter for most e-commerce companies. So could the uncertain economy, higher energy prices, and the effects of Hurricanes Katrina and Rita, which have shaken consumers’ confidence. “If consumer spending slows, that’s going to affect business across the board,” says Scott Devitt, an analyst with Legg Mason Wood Walker.

Overall, U.S. e-commerce sales will rise about 23%, to $85.2 billion, according to a recently raised forecast from Citigroup Research — a forecast generally shared by analysts. Says Merrill Lynch analyst Justin Post: “We’re looking forward to a good holiday quarter for e-commerce.”

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