EBay Inc. on Wednesday reported a sharp drop in quarterly net profit as the weak economy took a big bite out of its core online auction business.

EBay said net profit was down 31 percent in the fourth quarter from a year ago to 367 million dollars while revenue fell to 2.04 billion dollars, 145 million dollars, or seven percent, lower than for the same period last year.

The San Jose, California, company reported earnings per share of 41 cents, slightly better than the 39 cents expected by analysts.

Online auction revenue fell 16 percent during the quarter to 1.27 billion dollars.

"The revenue drop was attributable to the impact made by the strengthening dollar and the slow-down of the ecommerce market globally on the eBay business," the company said.

Revenue growth for other Internet businesses such as PayPal and Skype helped limit the damage in the fourth quarter.

PayPal's revenue rose by 11 percent to 623 million dollars during the quarter while Skype's revenue was up 26 percent to 145 million dollars.

For the full year, eBay said it posted net profit of 1.78 billion dollars, up from 348 million dollars in 2007 when its results were impacted by goodwill amortization worth 1.39 billion dollars.

"While the holiday season was tough and competitive, our overall results for 2008 were strong," eBay chief executive John Donahoe said in a statement.

"For 2008, we delivered double-digit revenue and earnings growth; made significant changes in our eBay business; and built a stronger, more diverse portfolio of leading e-commerce businesses.

"We will build on our strengths in 2009 while managing our business prudently in the continued challenging environment," he said.

EBay said it expected revenue of between 1.8 billion dollars and 2.05 billion dollars in the first quarter of the current fiscal year.

EBay's share price plunged 6.63 percent to 12.40 dollars in after-hours trading.