eBay Eats Tiffany’s Breakfast and Profit Soars

Posted Jul 17, 2008

?This was a strong quarter and we are very pleased with the performance of the portfolio, particularly with the growth generated by PayPal,? stated eBay CEO, John Donahoe. ?We remain confident in our strategies to improve the customer experience as we manage in an uncertain economic climate.?

eBay Inc. (NASDAQ:EBAY) has seen their profit soar this quarter.  eBay’s net income rose by 20% to $568 million compared to last year.  Revenue grew to $2.2 billion and equates to a 20% rise since last year as well.  eBay’s growth was due to an increase in advertising, classifieds, and PayPal.  eBay acquired PayPal for $1.5 billion in July 2002.

Even though eBay is enjoying strong profits, their users haven’t been very happy with a lot of the feedback changes, increase in fees charge to sellers, fixed-price listings, and the partnership with Buy.com.  eBay has also made an enemy with classifieds company, Craigslist.  eBay has a large stake in Craigslist, but they sued them for diluting their ownership and then Craigslist sued them back for starting a competitor, Kijiji. 

?When you have 84 million active users, any time you make a change, someone is going to be upset,? stated Donahoe in a call with investors/analysts. ?But we listen and we incorporate their feedback with what we believe is best for the collective good of the marketplace.?

In another victory for eBay, a judge has ruled that the auction company was innocent from a lawsuit that they were slapped with from Tiffany & Co. (NYSE:TIF).  Tiffany is angry that thousands of fake bracelets were being sold on eBay.  Tiffany went as far as calling eBay a “rat’s nest” of trademark violations.

“It is the trademark owner’s burden to police its mark,” stated U.S. District Judge Sullivan in New York. “Companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites.”

Late last month, eBay lost a $61 million case against Louis Vuitton Malletier, Christian Dior Couture, and Parfums Christian Dior.  Tiffany may appeal to a higher court, but until then it’s been a good month to be eBay.

Related Links:
NYT: (eBay profit source)
Boston.com (Tiffany case source)