NEW YORK - July 23, 2009 - Online retailer eBay saw profits slide by 29% in the second quarter as its traditional online auction and other retailing businesses suffered as a result of the wider economic Depression.

The company reported a profit of $327m (£198m) for the three months to the end of June, down from $460m in the same period last year.

eBay’s traditional “marketplace” division - which includes eBay.com as well as shopping.com and ticket resale site StubHub - saw sales fall 14% in the quarter, in part due to the stronger dollar as well as what the company coyly termed “challenging macroeconomic conditions”.

The decline in its traditional business overshadowed strength at both Paypal, its payments arm, where sales rose 11%, and Skype, its communications business, where sales rose 25% year-on-year during the quarter.

Skype, which eBay is planning to separate from its main business, added 37.3m users in the three-month period, taking its total user base to 480.5m.

Meanwhile, fellow online retailer Amazon said it plans to buy U.S. Internet footwear retailer Zappos.com for $807m in cash and shares.

The Zappos website will remain independent of Amazon, and employees at its Las Vegas headquarters will share in $40m of cash and restricted shares.