EBay forecast misses estimates as marketplace growth stalls

EBay Inc projected earnings that may miss analysts' estimates as growth on its marketplace stalled, revealing that shoppers went elsewhere during a holiday season that saw online spending reach new heights. Shares fell as much as 11 per cent in extended trading. 

PHOTO: REUTERS

JAN 28, 201610:39 AM

[SEATTLE] EBay Inc projected earnings that may miss analysts' estimates as growth on its marketplace stalled, revealing that shoppers went elsewhere during a holiday season that saw online spending reach new heights. Shares fell as much as 11 per cent in extended trading.

Profit, excluding certain items, will be 43 cents to 45 cents a share in the current quarter, EBay said Wednesday in a statement, compared with analysts' estimates of 48 cents. Sales in the fourth quarter were US$2.32 billion, unchanged from a year earlier, excluding PayPal Holdings Inc, which became a standalone company in July, EBay said.

EBay is struggling to remain relevant as Amazon.com Inc gobbles up market share by offering speedy delivery and brick- and-mortar retailers ramp up their online shopping options. The company also is working to improve traffic from Google Inc's search engine, a key entry point for many online shoppers.

"EBay has kind of lost its identity," said Steven Weinstein, an analyst at ITG Inc in San Francisco. "Their pricing isn't special. Their service isn't special. They've lost their competitiveness." U.S. e-commerce sales grew 13.6 per cent to reach US$106 billion last quarter, according to EMarketer. EBay's merchandise value - the total value of goods sold on the marketplace - of US$21.9 billion was unchanged in the quarter compared with 2 per cent growth a year earlier.

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The San Jose, California-based company forecast annual earnings of $1.82 to $1.87 a share, essentially the same as 2015. Considering the company bought US$550 million of its stock, "they are guiding to declining profits this year," said Gil Luria, an analyst at Webush Securities Inc.

Chief Executive Officer Devin Wenig needs to entice shoppers and merchants back to EBay at a time when they have more alternatives for buying and selling goods online and consumers expect fast, free delivery offered by Amazon. A goal of EBay's split in July from payments business PayPal was to make sure each company could focus on its primary businesses.

Since the split, EBay shares gained 1.6 per cent to US$26.42 through the close Wednesday in New York.

The company has been trying to change how it displays its abundant inventory from millions of sellers to remain relevant on search engines for prospective shoppers. EBay last year altered the way merchants list items so search engines reward the company for its total web traffic.

EBay, which attracted 162 million active buyers in the fourth quarter, has been taking steps to attract new customers. The company experimented with free listings of hot-selling holiday gifts this year, including some Star Wars toys, waiving the fees normally associated with selling an item in hopes of adding must-have inventory to the site.

The company reported its StubHub ticket exchange generated US$232 million in the fourth quarter, a 33 per cent increase from a year earlier.

BLOOMBERG

    
 

Las Vegas Sands' results trail estimates as gaming in Asia dips 

Las Vegas Sands Corp, the world's largest casino operator, posted fourth-quarter profit that missed analysts' estimates as gambling revenue in Macau and Singapore declined. 

PHOTO: REUTERS

JAN 28, 20168:06 AM

[LOS ANGELES] Las Vegas Sands Corp, the world's largest casino operator, posted fourth-quarter profit that missed analysts' estimates as gambling revenue in Macau and Singapore declined.

Profit excluding some items fell to 62 cents a share, the Las Vegas-based company founded by Sheldon Adelson said Wednesday in a statement. Analysts projected 64 cents, the average of estimates compiled by Bloomberg. Sales slumped to US$2.86 billion, compared with estimates of US$2.91 billion. The company raised its quarterly dividend to 72 cents a share for 2016.

BLOOMBERG

China: Shares flounder again, but "real economy" sound says state media

China's volatile shares tumbled again on Thursday, taking losses this month to about 25 per cent or 13 trillion yuan (US$2 trillion), while state media insisted that the market ructions did not reflect the real economy. 

PHOTO: REUTERS

JAN 28, 20164:18 PM

[SHANGHAI] China's volatile shares tumbled again on Thursday, taking losses this month to about 25 per cent or 13 trillion yuan (US$2 trillion), while state media insisted that the market ructions did not reflect the real economy.

The benchmark Shanghai Composite Index ended down 2.9 per cent, and the CSI300 index of the largest listed companies in Shanghai and Shenzhen shed 2.6 per cent, both indexes having tumbled this week to levels not seen since 2014.

Trading was very light, as many investors have given up on Chinese stocks, burnt by last summer's 40 per cent crash and a hair-raising January that has taken indexes back to late 2014 levels.

"The majority of equity investors we met over a four-day marketing trip in Asean last week had trimmed exposure to China equities by varying degrees and were waiting for signs of stabilisation for potential re-entry," said Japanese broker Nomura.

January began with sharp falls in Chinese stocks and a depreciation in the yuan currency, and the sell-off hasn't abated as economic data confirmed slowing growth and deteriorating business conditions.

As the markets keep falling, the prospect of investors being forced to sell stocks bought with borrowed money to cover margin calls has hurt sentiment further.

"Margin calls and delveraging is being talked about more and more in a market extremely bearish about China's economy and the yuan's value," said Wang Yu, analyst at Pacific Securities.

China's woes and plummeting oil prices have damaged risk appetite across the world's financial markets, and are complicating the policy calculations of leading central banks.

The US Federal Reserve left interest rates unchanged late on Wednesday and said it was keeping a wary eye on global markets and their impact on the labour market and inflation, but didn't signal it was ready to abandon its plan to tighten monetary policy this year.

It raised interest rates in December for the first time in almost a decade, and the prospect of more hikes has given the People's Bank of China (PBOC) an unenviable task of finding a level for the yuan that slows capital outflows without punishing the country's struggling exporters.

An editorial on Thursday in the People's Daily, the official mouthpiece of China's Communist Party, laid in to "groundless fears" about the economy, which it said was still propelling global growth, and enjoying rising foreign investment, moderate inflation and prudent monetary policy.

Market volatility, it said, was not a reflection of the economy but rather showed that the market, regulatory environment and investors still needed to mature.

Nomura said equity investors' top concern was the possibility of a one-off 10-15 per cent devaluation of the yuan, though the PBOC has kept the currency's daily midpoint fixing little changed since spooking the markets with a sharply weaker fix in early January.

That was the second time in six months that the bank allowed a sharp slide in the currency, which has depreciated more than 5 per cent over the past year, only to step in aggressively to stabilise it and deter speculation.

Spot yuan was at 6.5772 on Thursday, having hardly budged from Wednesday's close, while offshore it had firmed a little to 6.6129, a 0.5 per cent discount to the onshore rate.

State media have warned investors including billionaire George Soros, dubbed "the man who broke the bank of England" for betting against sterling in 1992, not to speculate against the currency.

The central bank has been making ample liquidity available to the banking system to avoid any cash squeeze ahead of long Lunar New Year celebrations beginning in early February.

But those funds are largely short term, and the big injections may have dashed some investors' hopes that the PBOC would cut banks' reserve requirements (RRR) soon to free up more money for longer-term lending which could boost economic activity.

The decline in the yuan and concerns about growth have fuelled a flight of capital out of the world's second-largest economy which policymakers are struggling to contain.

REUTERS

    
 

US: Wall St rises as oil soars on hopes of output cut

Wall Street was higher on Thursday morning, tracking a surge in crude oil prices, a day after the US Federal Reserve gave little indication of slowing the pace of future rate hikes. 

PHOTO: AFP

JAN 28, 201611:02 PM

[NEW YORK] Wall Street was higher on Thursday morning, tracking a surge in crude oil prices, a day after the US Federal Reserve gave little indication of slowing the pace of future rate hikes.

Crude was up nearly 6 per cent after Russian officials decided to talk to Saudi Arabia and other Opec countries about cutting output to boost prices.

The Fed kept interest rates unchanged and said it was "closely monitoring" global economic and financial developments, while keeping an optimistic view of the US economy.

US stocks closed sharply lower on Wednesday, with the S&P 500 falling more than 1 per cent, after the Fed's statement failed to impress some investors.

"The Fed meeting caused some kind of a knee-jerk reaction and the markets need a bit of time to digest what happened yesterday," said Khaldoon Ibrahim, chief executive of MarketsCompass.com, a trading advisory website.

The central bank and investors will now keep a keen eye on economic data and assess corporate earnings reports to gauge the impact from the global turmoil.

"Earnings have been generally good, but the outlook for the second quarter is not good, and that is what is spooking people," said Phil Davis, chief executive of Philstockworld.com.

Data on Thursday showed durable goods orders fell 5.1 per cent in December, widely missing expectations of a 0.6 per cent decline, while jobless claims fell more than expected to 278,000 last week.

At 9:35 am ET (1435 GMT), the Dow Jones industrial average was up 113.34 points, or 0.71 per cent, at 16,057.8, the S&P 500 was up 17.82 points, or 0.95 per cent, at 1,900.77 and the Nasdaq Composite index was up 59.12 points, or 1.32 per cent, at 4,527.29.

Nine of the 10 major S&P sectors were higher, led by the 3.55 per cent rise in energy stocks.

Caterpillar was up 6.1 per cent at $61.86, while Under Armour soared 17 per cent to $80.50 after both companies reported better-than-expected profit.

Facebook surged 13.4 per cent to $107.07 after the world's biggest social network reported a 52 per cent jump in revenue.

EBay sank 10.6 per cent to $23.62 after it forecast weaker-than-expected quarterly revenue and profit.

PayPal, which was spun-off from eBay last year, was up 8.2 per cent at $34.14 after its revenue beat estimates.

Juniper Networks was down 11.5 per cent at $23.50 and Qualcomm was off 3.6 per cent at $45.78 after both companies issued grim forecasts, prompting a slew of rating downgrades.

Tech heavyweights Microsoft and Amazon are among companies due to report results after the close.

Advancing issues outnumbered decliners on the NYSE by 2,347 to 316. On the Nasdaq, 1,794 issues rose and 416 fell.

The S&P 500 index showed no new 52-week highs and seven new lows, while the Nasdaq recorded four new highs and 21 lows.

REUTERS

    
 

In US oil capital Houston, no cheap fuel bonanza for airlines

Oil prices were higher Thursday after yet more volatile trading, as dealers reacted to further evidence of a supply glut and hints at possible action to reverse the market slide. 

PHOTO: REUTERS

JAN 28, 20165:44 PM

[NEW YORK] While airlines are in no rush to pass on fuel savings to passengers brought by the collapse in oil prices, the Houston travel market has left them little choice.

Airlines serving the US oil capital have resorted to steep discounts to lure newly budget-conscious energy executives back into the air, according to an analysis of ticket prices provided exclusively to Reuters.

Crude's 70-per cent drop in the past 19 months has made the Houston travel market a rare point of downward pressure on airline revenues. Its value, including flights, conventions and related services, was estimated at US$2.8 billion in 2014 in a report for the Texas governor's office.

The ticket data offers more detail than carriers have disclosed about the challenges they face at Houston's George Bush Intercontinental Airport, the ninth busiest globally by take-offs and landings, according to Airports Council International's 2014 ranking.

On average, round-trip business and first class tickets to London sold in September 2015 were 14 per cent cheaper than a year earlier, at about US$4,600, according to the latest figures from fare clearinghouse Airlines Reporting Corporation.

Tickets to Calgary, a gateway to northwestern Canada's vast oil fields, plummeted 59 per cent to US$1,020.

And prices for tickets to top drilling gateways Lagos, Dubai and Scotland's Aberdeen fell 22 per cent, 23 per cent and 31 per cent, respectively.

"It's a combination of fewer people traveling and not as many people flying business class," said Gary Pearce, chief commercial officer for travel management company ATPI's energy and shipping unit. "Companies are re-negotiating terms with anybody that provides a service to them," he added, such as asking airlines to sell lower fares or waive clauses on minimum bookings.

Exxon Mobil Corp, ConocoPhillips and BP PLC, which has its US headquarters in Houston, declined to comment for this story.

The oil slide has largely helped US airlines, reducing one of their biggest expenses and adding hundreds of millions of dollars to their bottom lines.

However, they have forfeited a large chunk of the gain because of fuel hedges they bought as protection against crude rising. Houston's example is another reminder that cheap oil cuts more than one way.

United Continental Holdings Inc said last week that it doubled its adjusted fourth-quarter profit to US$934 million from a year ago. But slack business in Houston will reduce its passenger revenue as a portion of flight capacity by 1 per cent in the first quarter, the airline said.

Chicago-based United is the most affected because it schedules more than 80 per cent of Bush Intercontinental's flights. About 10 per cent of United's flight capacity originated from Houston according to this week's schedules, aviation data and analytics company OAG said.

Other airlines adjusting to the oil slump include Delta Air Lines Inc, which recently stopped flights from its Minneapolis hub to Dickinson, North Dakota, near the Bakken shale oil formation.

Alaska Air Group Inc reported on an investor call last week that its energy-related sales were "fairly stable"because roughly the same number of workers needed to fly to oil-rich Prudhoe Bay to operate drills and pipelines there, despite lower production.

Airlines Reporting Corporation, owned by a group of North American airlines, declined to provide data on Prudhoe Bay flights and other routes that were dominated by a single carrier and therefore market sensitive.

Cheap oil has not only lowered corporate travel spending. Greater Houston's 6.5 million residents are cutting back on leisure trips, too.

The average low leisure fare is down 25 per cent from Houston while only down 20 per cent overall in the United States, according to a mid-January analysis of the top domestic routes by Harrell Associates, shared with Reuters.

Fares have fallen nationwide, not just in Houston, because lower fuel costs have let the largest airlines chop their fares in stiff competition with budget rivals like Spirit Airlines Inc Still, the lowest refundable last-minute fares from Houston are down 11 per cent, but up 5 per cent nationwide, Harrell Associates data showed.

United said last week it is scrapping plans to grow its Houston operation by 2 per cent in 2016 and keeping capacity steady instead.

The airline declined additional comment for this story but noted that in January 2015 it shrunk its Houston-Calgary operation to three flights per day from four.

The airline's loss could be a gain for budget rival Southwest Airlines Co, which in October started its first international flights to Latin America from nearby Houston Hobby Airport.

REUTERS

    
 

Oil prices higher as volatility grips crude market

Oil prices were higher Thursday after yet more volatile trading, as dealers reacted to further evidence of a supply glut and hints at possible action to reverse the market slide. 

PHOTO: REUTERS

JAN 28, 20169:24 PM

[LONDON] Oil prices were higher Thursday after yet more volatile trading, as dealers reacted to further evidence of a supply glut and hints at possible action to reverse the market slide.

At about 1200 GMT, US benchmark West Texas Intermediate for delivery in March was up 11 cents at $32.41 a barrel.

Brent North Sea crude for March grew 36 cents compared with Wednesday's close to stand at $33.46.

Prices slid in earlier Asian trading hours, a day after official data revealed that US commercial crude stockpiles had climbed to a record level, further stoking worries about global oversupplies.

But in what has been an extremely volatile week's trading, oil futures have enjoyed strong gains on hopes of stimulus measures in the eurozone and Japan.

Additional support for prices has come from market talk of a possible meeting of OPEC and non-OPEC oil producers, notably Saudi Arabia and Russia, aimed at limiting supplies of crude to help support a price recovery.

The economy minister of recession-hit Russia on Thursday pledged nearly $10 billion to tackle the country's financial crisis, as the low oil price weighs heavily on growth.

Alexei Ulyukayev earmarked 750 billion rubles (US$9.8 billion) in anti-crisis measures.

The world remains awash with oil supplies, a situation that has been fuelled by Opec's refusal to curb crude output as the cartel's Gulf-state members look to squeeze out US shale producers.

The Saudi-backed strategy is aimed also at pressuring Russia - the biggest global oil producer - and forcing fellow Opec member Iran to trim output as Tehran looks to hike its own production after the lifting of Western sanctions.

Oil markets have been extremely volatile in recent days, soaring late last week from 12-year lows.

However, continuing worries about a supply glut, weak demand and the slowing global economy have returned to the fore.

The US Department of Energy on Wednesday reported that the country's commercial crude inventories last week jumped 8.4 million barrels to 494.9 million - the highest amount on record.

Rising inventories typically signal weak demand in the world's top oil consuming nation and puts further downward pressure on prices in a saturated market.

"We remain slightly sceptical of further (price) increases," Phillip Futures analyst Daniel Ang said in a market commentary.

Ang said a slight weakening of the dollar after the US Federal Reserve left interest rates unchanged Wednesday could have limited the decline, but added the oil price support "should not last for long".

Higher US interest rates are a boost to the US currency, making dollar-priced oil more expensive to holders of weaker units, dampening demand.

AFP