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Ebay struggles to shift goods on the Web

EBAY Inc's fourth-quarter earnings fell 31 percent, indicating that its Internet auctions and "Buy It Now" offerings are being hurt by the recession just like traditional retail sales.

The results, combined with a forecast below analysts' expectations, sent eBay shares skidding more than 6 percent in after-hours trading.

The California-based eBay said on Wednesday it earned US$367 million, down fromUS$531 million in the same period a year ago.

Revenue fell 6 percent to US$2.04 billion, with the company saying the decline stemmed mostly from the recession and the strengthening of the dollar. Deals done in other currencies now translate into fewer dollars.

In an interview, Chief Executive John Donahoe said the company knew it would be a difficult fourth quarter, as consumers held on to their money.

Among other issues, there was no must-have gift item this holiday season, unlike previous years. Donahoe said eBay often benefits from the scarcity of such products by becoming one of the few places shoppers can still buy them.

In the company's PayPal unit, which handles online payments for eBay and other sites, revenue climbed almost 11 percent to US$623 million.

The company's number of active users - an important measure of how well eBay is attracting new buyers and sellers - rose almost 4 percent to 86.3 million.

Yet eBay's gross merchandise volume - the total amount of money that flows from transactions on the site, excluding those involving vehicles - sank 12 percent toUS$11.5 billion.

This marked the second quarter in a row in which this figure has declined. Until last year it had never happened to eBay at all.



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