May 2, 2008, 12:00 AM

As eBay’s Q1 revenue tops $2 billion, new chief promises more changes ahead

John Donahoe, eBay’s new CEO, says the e-marketplace plans to increase buyer confidence, improve product selection and make items easier to find. The value of goods sold on eBay worldwide grew 12% year-over-year in the first quarter to $16 billion.

By Don Davis

Online marketplace eBay Inc. ruffled feathers with pricing and policy changes early this year that resulted in a 24% boost to first quarter revenue, and the new CEO says more changes lie ahead.

“We remain committed to making the necessary changes that will make eBay easier and safer, and we intend to make additional changes throughout the year,” John Donahoe told analysts last month.

Donahoe, who succeeded Meg Whitman March 31, said eBay aims to increase buyer confidence, improve selection and make items easier to find. He pointed to a test in Australia where eBay sellers can accept payment only through eBay’s PayPal service as “an ideal way to give buyers a higher degree of protection and trust.”

He noted eBay “stayed the course” despite a sellers boycott in February over eBay raising its sales commissions while reducing listing and shipping fees and giving greater weight to buyers’ ratings of sellers. The pricing changes were designed to boost listings, which went up 10% in the first quarter to 647.4 million.

The value of goods sold on eBay worldwide grew 12% to $16 billion in the quarter and revenue from the Marketplaces segment-including eBay, comparison shopping site and online ticket seller StubHub-increased 19% to $1.48 billion. Marketplace revenue accounted for most of the 24% increase in overall revenue to $2.19 billion from $1.77 billion for the first quarter ended March 31, as overall net income grew 22% to $460 million.

PayPal also excelled in the quarter, with revenue increasing 32% to $581.6 million. PayPal’s payment-processing unit, which services 31 of the top 100 online retailers, handled $6.6 billion in purchases, up 61% from a year ago.


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