Page last updated at 07:36 GMT, Thursday, 17 July 2008 08:36 UK

eBay sees difficult times ahead

EBay sign
eBay is having trouble attracting new users

Online auction site eBay has warned that sales will be lower than expected in the current quarter as it struggles against a weakening global economy.

The caution came as eBay posted a rise in net income of $460m (230.2m) over the past three months to June, from $376m a year earlier.

But investors were disappointed by the firm's prudent outlook, with full-year projections kept unchanged.

The US firm is also battling against trust problems among its users.

Earlier this year, it overhauled its feedback system, banning sellers from leaving negative comments about buyers.

It is currently appealing against a ruling from a French court ordering it to pay 40m euros to luxury goods giant LVMH, which owns the Louis Vuitton and Christian Dior brands, for allowing online auctions of fake copies of its goods.

Attracting users to its shopping sites is also proving to be difficult.

eBay said the number of new active users rose by 1% during the quarter from a year earlier, even as listings increased by 19%.

"It's ancient history now, but in past years, investors knew eBay would start out each year conservatively and raise their outlook more and more as each quarter went by," Global Crown Capital analyst Martin Pyykkonen said.

"What eBay is saying now is, 'We don't want to go out on a limb,'" Mr Pyykkonen said. "The economy is working against them."

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