http://www.nytimes.com/2014/10/16/technology/growth-dip-in-auctions-cuts-results-for-ebay.html 2014-10-16 02:56:25 Growth Dip in Auctions Cuts Results for eBay Profit was down, but revenue was up at eBay in the third quarter. === EBay faces challengers in its payments business. It is dealing with fallout from a security breach. And now, its lucrative online auction business isn’t showing the luster it once held. All those pressures were apparent in The company said it earned $673 million in the last quarter, a 2 percent decrease from the period a year ago. Overall revenue rose 12 percent, to $4.35 billion. Both profit and revenue missed analysts’ estimates, and its shares fell more than 1 percent in after-hours trading. The biggest warning sign came from the company’s marketplaces division, the online auction unit The earnings are likely to lend support to the company’s plan to split the marketplace from PayPal, the company’s fast-growing payment arm. And John J. Donahoe II, “Rapidly changing competitive environments in commerce and payments,” he said in a statement, “underscore the opportunities for eBay and PayPal, and highlight how each business will benefit from the focus and agility of being an independent company.” The split, analysts say, could also give eBay more room to think of new ways to expand the marketplace and payments businesses by partnering with other companies, a tactic that may have not been previously possible because of eBay’s close ties to PayPal. And the move may free up both sides to innovate on new product ideas, such as changes to the marketplaces unit, which analysts say is in dire need of future growth opportunities. “There’s only so much demand for the auction style environment,” said Robert S. Peck, an analyst at SunTrust Robinson Humphrey. “That’s the challenge — how can you expand the market for fixed price items?” This is an area in which Amazon, the online retail giant, has excelled. Amazon hosts online storefronts for more than two million third-party small and medium-sized merchants that are able to offer their goods to a much larger global audience through the platform. EBay has long held a similar practice with its fixed-price “buy it now” items, but is still predominantly known for its auction-style sales. Analysts say that eBay may have an opportunity to capitalize on the threatened feelings some small businesses have against Amazon, which offers steeply discounted items that can often undercut traditional brick-and-mortar stores. “Many retailers don’t trust Amazon, so eBay can potentially swoop in and work with them there,” Mr. Peck said. But eBay faces many other challengers, too. The Alibaba Group, the huge Chinese e-commerce company, recently sold its shares to the public on the New York Stock Exchange. Though it is moving cautiously into the West, the company could be a major player in the future. Apple unveiled its e-commerce product, Apple Pay, which aims to change the way consumers pay for items online and in stores. And Square, the payments processing start-up, has raised hundreds of millions of dollars to upset incumbents in the payments industry. “This was not a split from a position of strength,” said Ben Schachter, an Internet analyst for Macquarie Securities. “Google is getting more interested in the space. Amazon is already very active in marketplaces. Alibaba is amping up. Walmart, too, is becoming more of a digital player.”