The Low Post News

Ebay Takes Tax Charge on Repatriated Earnings

Ebay Inc, which fended off an attack from Carl Icahn an activist shareholder, is finding it a more difficult fight to increase its sales growth.

The largest marketplace online said its revenue for the second quarter would be between $4.33 billion and $4.43 billion, which would trail the projections of analysts on Wall Street.

Ebay also posted a net loss for the first quarter after taking a tax charge of $3 billion to allow it to repatriate its foreign earnings, boosting available cash by over $6 billion.

CEO John Donahoe at Ebay has sought to shore up the e-commerce business of the company by investing in mobile as well as other services to increase user traffic.

Moving profits from overseas back into the U.S. might give the marketplace more room to increase its spending to aid in fending off its rivals such as Amazon and startups that look to take away business from its payments unit PayPal.

Shares at Ebay were lower by 4.5% in late trading. The stock however climbed back at the close of business on Tuesday, which left it little changed for 2014.

During the first quarter, the company, based in San Jose, California, recorded a $23.3 million loss equal to $1.82 per share. Included in the loss was a tax charges for the repatriations of more than $9 million in earnings from overseas that were previously not subject to taxes in the U.S., said Ebay in its earnings statement.

The decision to repatriate the earnings came as a surprise as other large tech companies like Microsoft and Apple have avoided the paying of taxes by keeping the profits overseas.

While Ebay could use the earnings to help with any acquisitions, there is not any domestic deal that is pending, said Donahoe.

The move does not preclude the business from increasing debt, said Donahoe, as Apple this week did. Ebay, which added over $5 billion to is buyback plan for stock earlier in the year, could also repurchase shares of stock with the repatriated cash.

Ebay announced it ended its first quarter with $11.9 in cash, its equivalents and non-equity investments, which included close to $2.2 billion in the United States.

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