Top > Business > 2006 > July > 2006-07-21

eBay Raising Fees to Soothe Investors

Online auctioneer eBay Inc. on Wednesday said it would raise the fees charged on its online stores that have started diverting visitors from its auction sales. CEO Meg Whitman said the company is working to focus more on its profit motive and online auctions. According to news agencies, Whitman has been quoted as saying, "Whenever we do a fee increase, our community doesn`t like it, but I think they will understand the reasons why we are doing this." The news coincided with the release of the company`s second quarter earnings, which met Wall Street expectations.

Investors welcomed the move to raise the fees paid by online stores. eBay`s shares rose nearly 6 percent in extended trading late Wednesday. The company is currently working to make amendments with stockholders, spending up to $2 billion in a bid to buy back its shares over the next two years. The budget allocated to buy back eBay`s shares appears small when compared to the $40 billion in stockholder wealth that has disappeared over the last two years. The auctioneer`s share value continued to erode until the company lost up to half of its stock value in the process.

eBay earned $250 million, or 17 cents per share, for the second quarter that ended in June 2006. These earnings imply a 14 percent drop from $291.6 million, or 21 cents per share, that was reported in the same quarter of 2005. The reported revenue for eBay for the period, which met Wall Street projections, stood at $1.41 billion, which was a 30 percent increase from $1.09 billion last year. However, investors are not satisfied with the company just meeting analysts` expectations, as its shares have not been performing well in the stock market. Thus, the changes.