EBay, the online auction site and owner of PayPal has reported second quarter profits which were better than expected, but threw a note of caution saying it expects adverse currency movements to have a negative impact on overseas sales.

According to the Bloomberg news service, Ebay’s Second-quarter net income rose 26 percent to $412.2 million, or 31 cents a share, from $327.3 million, or 25 cents a share. The company delivered earnings of 40 cents a share, with the average estimate of analysts polled by Bloomberg predicting the company would earn 38 cents a share.

Despite EBay’s improved performance as it recovers from a fall in spending on e-commerce, the company’s strategy of focusing on international markets threatens its turnaround.

A declining Euro and other currencies against the US dollar reduces the value of its international income in dollars.

Currently EBay earns more revenue internationally than any other large US internet company including the likes of Google, Yahoo and Amazon.

The impact of adverse currency movements is estimated to hurt sales by as much as US$250 million dollars. The company expects third quarter revenue to be between US$2.13 billion and $2.18 billion. Most analysts have predicted that the third quarter revenue number to be US$2.2 billion.

In March the company reduced and scrapped some of its listing fees in its Marketplaces business. A move designed to attract a larger number of merchants to use the service. According to the company, the move has been successful, and those changes will boost second half yearly results.

John Donahoe, EBay chief executive officer says that whilst he believes the changes implemented will help the company’s performance in the long run, he was still dissatisfied with the progress of the flagship site in the U.S.

While confident the changes will help the company in the long run, Chief Executive Officer John Donahoe said he wasn’t satisfied with the progress of the main site in the U.S.

“I have high expectations for our company, our employees and for our customers,” Donahoe said in an interview. “We did good, not great in our execution in the U.S.”

The Marketplaces unit, which includes the main e-commerce site, ticket reseller StubHub and the classified-advertising service, accounts for most of EBay’s revenue.

Mobile service have become a strong source of growth for EBay, and though it trails rivals like Amazon in overall growth rates. The company is now the top mobile internet retailer in the U.S.

EBay says that goods sold through devices like the iPhone, iPad and other devices will more than double to US$1.5 billion this year.

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