Ebay's First Quarter Estimates

ebay

Q1 Earnings Estimates

Here are the long-awaited first quarter estimates for Ebay…

Q1 Revenue:  $2.25 Bil

Q1 EPS:  $0.39

Income Statement
Three months ended March 31, 2010
Revenue	$2,249,562
Cost of Revenue	$519,132
Gross Margin	$1,730,430
Operating Expenses:
R&D	$199,483
S&M	$489,982
G&A	$290,448
Provision for Loan Loss	$105,729
Amortization	$63,660
Restructuring	$1,250
Total	$1,150,552
Income from Operations	$579,878
Interest Income	$24,836
Income before Taxes	$604,714
Provision for Income Taxes	-$102,801
Net Income	$501,913
Shares Outstanding	1,300,000
EPS	$0.39

Current Street consensus is for revenue to come in at $2.18 Bil and EPS at $0.41.  Strangely enough, my estimates come in higher on revenue and lower on EPS.  I believe that the discrepancies are occurring as a result of The Street discounting the overall economic rebound that is taking place, while being too optimistic when it comes to Ebay’s cost control.  We’ve seen over the past two years their costs rise as a percentage of total revenue.  While this phenomenon has been offset lately by the sale of assets like Skype, I still see room for improvement.  There are a lot of great things taking place within the company.  They have completed multiple mergers and acquisitions (M&A) over the past year and once these additions settle in, there will definitely be some upside movement in revenue. 

In the past, I’ve always posted an Accuracy Table showing the different forms of linear regression that have been tested in the pursuit of an accurate revenue estimate.  As can be seen from the below table, there were actually three different types (in yellow) of regression that came close to predicting Ebay’s Q4 revenue figure.  Therefore, these three models were used to create my current revenue estimate of $2.25 Bil.

Accuracy
Model	Prediction	Percent Err.	W/ St. Err.	Percent Err.	R^2	Ad R^2
First-Order	$2,367,011.9	0.17%	$2,518,595	-6.23%	76.0%	74.1%
CFO	$2,286,900.3	3.54%	$2,369,763	0.05%	93.4%	92.3%
Deasonal	$2,421,829	-2.15%	$2,589,734	-9.23%	71.1%	68.8%
Dummy	$2,447,334	-3.22%	$2,612,970	-10.21%	77.9%	69.1%
Lagged	$2,241,638	5.45%	$2,376,888	-0.25%	42.3%	27.8%
		Actual Dec-2009 Sales
		$2,370,932

This post is just a taste of what is to come over the next 24 hours.  Next up: 

1)      Q2 Revenue

2)      Q2 EPS   

3)      Price Target

If you like what you’ve read and are curious what my next estimates are for Ebay, Amazon, and the many others this earnings season, be sure to click “Follow” to the right of this post!

EBAY Ownership

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Author’s Family:  NO

Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.