From Reuters - EBay Inc.'s EBAY Web marketplace business in China is off to a good start this year and the company's overall ability to generate healthy operating margins is "completely intact" despite big investments, eBay's chief financial officer said on Tuesday.
CFO Rajiv Dutta repeated the company's 2005 financial targets set in January and said eBay had 10 million registered users in China.
"(It's been a) strong start to 2005," he said at a Lehman Brothers conference in Half Moon Bay, California, south of San Francisco, which was monitored by Webcast.
San Jose, California-based eBay also said in January it would increase its 2005 investments in key areas, particularly China and its online payment service known as PayPal, from $200 million to $300 million, and would sacrifice some short-term earnings growth to bolster long-term growth strategy.
Of that amount, $100 million -- about 2 percent of eBay's expected global revenue -- is earmarked for China, which eBay expects to be one of its biggest markets in coming years with a population of more than 1 billion that continues to see purchasing power rise as the economy develops.
EBay, which has users of its online buying and selling service in about 150 countries, started making investments in China about 2 1/2 years ago, Dutta said.
Dutta said operating margins, a key measure of profitability, were holding up despite the big investments.
"There is no doubt in my mind that the margin generating capability of this business is completely intact," he said, adding eBay would continue to generate cash flow from its businesses.
Financial analysts who cover eBay have voiced concern over the company's continued ability to grow the online bazaar at a fast pace.
Dutta repeated the company's full-year 2005 outlook provided in January that called for revenue of $4.25 billion to $4.35 billion and earnings, excluding items, of $1.48 to $1.52 a share. An eBay spokesman later said there was nothing new to the company's financial outlook.
EBay's stock traded down about 60 cents, or 1.4 percent, at $41.29 on the Nasdaq in afternoon trading.
Dutta said eBay was positioned for long-term growth and would not be confined to the twists and turns of
quarter-to-quarter financial reporting.
"It's not about the year, not about the quarter ... We have chosen the long term," he said.
