eBay (EBAY) Trims FY12, Q3 non-GAAP EPS Outlook Slightly on $3B Debt Offering; Cites Interest Expense

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eBay Inc., (Nasdaq: EBAY) reported that the company is updating its third quarter and full year 2012 earnings per diluted share guidance to account for the expected impact of its $3 billion debt offering, which priced earlier today. Closing of the offering is scheduled for July 24, 2012 and is subject to customary closing conditions.

“As we disclosed in our earnings release yesterday, we have been evaluating sources of additional liquidity even though we believe that our strong balance sheet and free cash flow will allow us to finance our organic needs and stock repurchase programs over the near to medium term. We also do not anticipate meaningful mergers and acquisitions activity in the near term,” said eBay Inc. Chief Financial Officer Bob Swan. “In light of the low interest rate environment, we felt that conditions were right and decided to opportunistically enter the market.”

Based on the pricing of the debt offering announced today, the company expects that the $3 billion public debt offering will increase its interest expense by approximately $32 million in 2012, including the amortization of debt discount and offering expenses.

Assuming the closing of the offering:

• Third quarter 2012 — eBay expects net revenues in the range of $3,300 - $3,400 million, which is unchanged from the amounts in the company’s July 18, 2012 earnings release. However, eBay now expects GAAP earnings per diluted share in the range of $0.41 - $0.43 and non-GAAP earnings per diluted share in the range of $0.52 - $0.54.
  
  eBay previously expected EPS of $0.53 - $0.55. The Street was looking for EPS of $0.55.
  
  
• Full year 2012 — eBay expects net revenues in the range of $13,800 - $14,100 million, which is unchanged from the amounts in the company’s July 18, 2012 earnings release. However, eBay now expects GAAP earnings per diluted share in the range of $1.89 - $1.94 and non-GAAP earnings per diluted share in the range of $2.28 - $2.33.
  
  Previous expectations called for EPS of $2.30 - $2.35. The Street was looking for EPS of $2.35.

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