eBay Reports Rising Revenues

eBay Reports Rising Revenues

eBay reported fourth-quarter revenue of $2.4 billion this week, up 16% from the same period last year. The better-than-anticipated revenue included $112 million from Skype for the period that eBay has owned the business. (In November 2009, eBay completed its sale of Skype to an investor group.)

Shares of eBay rose over 7% following the report. The e-commerce provider attributed its strong earnings primarily to excellent growth in PayPal and StubHub and improvement in growth rates in the core eBay business, as well as the positive impact from foreign currency movements. eBay recorded profits of $1.4 billion for the quarter.

"We delivered a strong fourth-quarter with double-digit revenue growth driven by exceptional performance at PayPal and turnaround progress and momentum in our core eBay business," said eBay Inc. President and CEO John Donahoe. "PayPal significantly expanded its presence globally and, for the first time, processed more than $20 billion in total payment volume in a quarter."

eBay says it is starting 2010 with significant progress towards its growth strategies for both PayPal and eBay. For first-quarter of 2010, eBay estimates net revenues in the range of $2.1 bilalion to $2.2 billion, representing growth of 12% to 18% excluding the 2009 impact of its sale of Skype.

eBay, Inc. (EBAY) ended the week at $23.58.

AMEX Profits Soar

American Express Company (AMEX) reported fourth-quarter income of $710 million this week, up 132% from $306 million one year ago. Company profits soared to $716 million for the quarter, up 198% from $240 million a year ago.

"We ended the year on a positive note with card member spending up 8% and credit indicators showing further signs of improvement," said Kenneth I. Chenault, Chairman and Chief Executive Officer.

Analysts say that AMEX fared better than other credit agencies in the recession because of the diversity of its business. AMEX not only issues credit cards, but builds business for merchants and operates a global payment network. The company's earnings were well above the depressed levels of 2008.

AMEX said that it stayed consistently profitable throughout the quarter by building a more liquid funding base and investing selectively in the business. This progress allowed AMEX to maintain its dividend at a time when many other companies cut or eliminated their quarterly payment to shareholders. In the future, AMEX plans to extend its payments business and offer new fee based services.

American Express Company (AXP) ended the week at $38.59.

Google Profits on Search Ads

Google reported rising profits this week signaling that Internet search ad click-throughs are returning to more normal levels. Paid clicks rose by 13% in the fourth-quarter when compared with the same quarter of 2008.

Google's fourth-quarter revenues totaled $6.67 billion, an increase of 17% over last year. The Internet search engine posted profits of $1.97 billion, compared to $382 million in the fourth-quarter of 2008.

Google attributed its rising profits to an increase in advertisements and average advertisement price. Analysts say that Google also benefitted from consumer spending during the holiday season. As the economy recovers, consumers are "googling" more, increasing ad click-through revenue.

Eric Schmidt, CEO of Google said, "Given that the global economy is still in the early days of recovery, this was an extraordinary end to the year." The company remains "hugely optimistic" about the Internet and plans to continue to invest heavily in online technology and innovation.

Google, Inc. (GOOG) ended the week at $550.01.

The Dow started the week at 10,610 and ended at 10,173. The S&P 500 started the week at 1,136 and ended at 1,092. The NASDAQ started the week at 2,288 and finished at 2,205.

Treasuries Fall on Economic Data Reports

Treasuries Fall on Economic Data Reports

Treasuries fell earlier this week with yields rising after the release of a series of mixed data reports. The Labor Department reported first-time claims for state unemployment rose by 482,000, the largest amount in eight months. The increase was much larger than economists anticipated, but this may be due to delays in reporting claims for the holiday season.

The Philadelphia region benchmark index on manufacturing fell to 15.2 in January from 22.5 in December according to the Federal Reserve Bank of Philadelphia. Economists did not anticipate such a sharp decline in light of recent signs that the manufacturing sector is in recovery.

The Conference Board Leading Economic Index for the U.S. increased 1.1% in December, following a 1.0% gain in November and a 0.3% rise in October. Ken Goldstein, Economist at The Conference Board, stated, "The indicators point to an economy in early recovery. . . The leading economic index suggests that the pace of improvement could pick up this spring."

Treasuries regained earlier losses following President Obama's announced plan to limit the size of the nation's banks. "While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," said President Barack Obama at the White House. As the broader market tumbled with the financial sector leading the way, investors moved to bonds in search of some security.

The 10-year Treasury note yield began at 3.68% and ended at 3.60%. The 30-year Treasury note yield began at 4.58% and finished at 4.52%.

Long-term Rates Down for Third Week

Long-Term Rates Down for Third Week

Freddie Mac reported 30-year rates down for the third consecutive week. The 30-year fixed-rate mortgage (FRM) averaged 4.99%, down from last week when it averaged 5.06%. Last year at this time, the 30-year FRM averaged 5.12%.

The 15-year FRM this week averaged 4.40%, down from last week when it averaged 4.45%. One year ago at this time, the 15-year FRM averaged 4.80%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27% this week, down from last week when it averaged 4.32%. One year ago, the 5-year ARM averaged 5.24%. The 1-year Treasury-indexed ARM averaged 4.32%, down from last week when it averaged 4.39%. At this time last year, the 1-year ARM averaged 4.92%.

"Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5% once more," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. Nothaft pointed out that ARM rates eased following indicators that the Federal Reserve will not raise the target rate in its upcoming meeting on January 26 and 27.

The money market fund finished this week at 0.89%. The 1-year CD finished at 1.38%.

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