Earnings Preview: EBay seen posting stronger 2Q

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NEW YORK (AP) — EBay Inc. is expected to post sharply higher earnings and revenue in the second quarter on Wednesday, helped by its online payments service and by strength in the e-commerce business that includes its flagship website.

WHAT TO WATCH FOR: Investors will be looking for signs of growth in eBay's marketplaces unit, which includes eBay.com and other e-commerce sites, and in PayPal, which processes payments on the Web and has grown quickly in recent quarters.

EBay has been working to expand PayPal beyond the Internet, to brick-and-mortar stores and to mobile devices, so investors may be listening for any updates on this front. Earlier this year, the company unveiled a mobile payments service for merchants, PayPal Here, that lets customers pay using credit cards, PayPal accounts or, in the U.S., personal checks using merchants' mobile phones.

"We think the market opportunity for PayPal is understated given the potential for a meaningful increase in merchant and consumer adoption rates and limited expectations for PayPal's point-of-sale and PayPal Here initiatives," wrote Benchmark analyst Daniel Kurnos in a recent note to investors.

Kurnos, who rates eBay "Buy," added that he thinks the economic slowdown looks to be hurting traditional retailers more than on online retailers such as eBay.

WHY IT MATTERS: EBay is one of the world's largest e-commerce companies. The health of its core businesses gives an idea of how overall online commerce is faring.

WHAT'S EXPECTED: Analysts, on average, expect earnings of 55 cents per share on revenue of $3.36 billion, according to FactSet.

LAST YEAR'S QUARTER: EBay earned $283.4 million, or 22 cents per share. Excluding one-time items, eBay earned 48 cents per share, beating analysts' expectations. Revenue was $2.76 billion, also above estimates.

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