Analysts Cautiously Optimistic as eBay Gets Ready to Close the Books on 2012

This week, we’ll find out if the 80 percent rise in eBay’s stock over the past year is justified.

ebay_signOn Wednesday, the San Jose-based company will report fourth-quarter and year-end earnings, and eBay is expecting the holidays to have treated it well.

For the fourth quarter, it is projecting earnings per share of up to 58 cents on revenue of up to $4 billion. For the full year, profits are expected to be as high as $1.99 a share on up to $14.1 billion in revenue.

Analysts are a little more cautious.

The consensus is calling for eBay to earn a profit of 61 cents in the fourth quarter and $2.05 a share for the full year. Those numbers are best compared to eBay’s non-GAAP projections, which exclude some items. On a non-GAAP basis, eBay is projecting to earn up to 69 cents a share for the quarter, and up to $2.35 a share for the year.

One analyst, however, recently revised his target, saying he expects eBay to now hit the projected 69 cents a share.

The rise in the stock price over the past year stems from the work eBay has done to overhaul its marketplace business.

The turnaround has included fixing back-end technology, like search algorithms, and revamping the design, including a new logo and homepage. Innovation is also occurring in delivery with programs testing same-day delivery and pickup services. As the transformation has started to take hold, eBay has started to attract new users to the site via TV commercials.

Operating alongside eBay is its buddy, PayPal, which also had a strong year. In the third quarter, the payment division saw revenue jump 23 percent compared to the year earlier.

One particular subject the company will be eager to talk about this quarter is how much growth it is seeing from consumers shopping on their phones and tablet computers. In the third quarter, it forecasted that eBay and PayPal would each transact $10 billion in volume this year over mobile, or more than twice what they recorded in 2011.

It will not be a surprise if eBay blows past these numbers, given the number of times it has revised its figures upward. Other third-party reports confirm what eBay is already witnessing.

For instance, last week, eMarketer reported that U.S. sales over mobile devices increased 81 percent, to nearly $25 billion, in 2012. At that level, it said, mobile devices accounted for 11 percent of total U.S. e-commerce sales. In comparison, I’ve been reporting for the past few months that eBay’s mobile revenue is closer to 16 percent of its total sales (but those figures have been based only on estimates).

Amazon is reportedly generating half as much, or around 8 percent to 10 percent of its revenue from mobile.

Finally, analysts won’t just be looking for a recap of the company’s 2012 accomplishments on Wednesday, but will also be looking for hints about the future.

The big question on everyone’s mind is whether eBay can maintain its growth for another year.

On the marketplace side of the business, eBay anticipates growing revenue by helping brick-and-mortar stores like Toys “R” Us and Macy’s compete online. Meanwhile, PayPal has been slowly expanding into in-store payments, with the hope that 2013 will be the first year it brings in revenue from the business (or at least that’s what eBay hopes).

On Friday, eBay’s shares traded 1.3 percent higher to close at $53.70, which is just shy of its 52-week high of $54.20 a share.

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— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google