In the meantime, eBay remains the largest global marketplace with three times the GMV of our nearest competitor and we have important strengths in these uncertain times with more users, more traffic, and more successful transactions than any other e-commerce site.

Now I mentioned we anticipate a very challenging fourth quarter holiday season where consumers will be cautious with their spending. We intend to fight aggressively for demand in the fourth quarter to support our sellers and driving demand to their great deals and great service.

In summary, we have a strong portfolio of businesses that generate growth and healthy returns and we believe we are well-positioned to serve consumers globally in tough times. We have a leading e-commerce marketplace and we are making the right changes to reinvigorate and strengthen eBay. PayPal has strong momentum as the number one online payments brand and this business will become even stronger following our acquisition of Bill Me Later.

Classifieds, advertising, stub hub, Skype, and the rest of our portfolio are also strong and profitable and we will continue to drive leadership positions in each of these and we will do this with our ongoing commitment to strong financial and operating discipline. We have the right team and we will deliver on our commitments while continuing to invest in the long-term growth of our Company.

Simply put, eBay is a strong Company in this environment; we intend to get stronger. Now let me turn it over to Bob for more details on our Q3 results.

Robert H. Swan

Thanks John. Now I’ll review our financial performance in some detail and during my discussion, I’ll reference our earnings slide presentation which accompanies the webcast.

Overall, our Q3 financial results were solid in an increasingly difficult environment. Revenue came in slightly below the midpoint of our guidance we provided in July while EPS came in significantly above our expectations. Revenue growth was up 12% year over year, non-GAAP earnings growth was up 11%, and we generated $543 million in free cash flow during the quarter.

We continued to execute on our stock buy-back program, repurchasing $623 million worth of eBay shares. Additionally, last week we announced two acquisitions that are intended to strengthen our faster growing businesses and position us competitively for the future. We also announced actions to simplify our organization in order to streamline decision making and reduce our cost structure. This will result in a charge of approximately $70 million to $80 million, primarily in the fourth quarter and annualized savings of approximately $150 million.

Our combined businesses generated net revenues of $2.1 billion in the third quarter, a 12% increase over last year. Organic revenue growth excluding acquisitions and FX was 9%.

Overall revenue growth was enabled by high growth PayPal merchant services, classifieds, advertising, and Skype. Our revenue growth was negatively impacted throughout the quarter by the broader economic environment, as well as a strengthening U.S. dollar. We saw considerable slowdown across virtually all our businesses beginning in the mid-August.

Non-GAAP EPS was $0.46 in Q3, an 11% increase over last year and $0.05 above the high-end of our guidance range. Adjusted for a one-time tax gain in the third quarter of 2007, EPS growth would have been 24%. The stronger-than-expected EPS performance was primarily driven by a lower tax rate and cost controls as we tightened discretionary spending in light of the slowing economy.

Our operating margin for the quarter was 31.8%, up 40 bps from last year even though our lower margin businesses, PayPal and Skype, grew faster. Margins improved in all three of our business segments year over year.

We generated free cash flow of $543 million in the quarter, an increase of 6% from last year primarily driven by earnings expansion while CapEx as a percentage of revenues came in at 7%.

Return on invested capital increased to 28.8% on a trailing 12-month basis. This measure has shown continuous improvement over the course of the year as we’ve been able to generate higher earnings on roughly the same level of capital employed.

So, overall we delivered solid financial results in a very tough economic climate. Externally, consumers are under significant pressure and appear to have reigned in their discretionary spending. E-commerce growth rates fell dramatically from Q2 to Q3. Similarly, merchants on PayPal''s merchant services platform experienced a significant slowdown in average payment size.

Internally, we experienced economic weakness across our entire portfolio of businesses. Vehicles GMV, which makes up 20% of total GMV, decelerated by 12 points from Q2 to Q3 and got progressively worse throughout the quarter. Our non-vehicles GMV growth performed solidly in the first part of the quarter but started to decelerate sharply in mid-August. Similarly, we saw a significant slowdown at Stub Hub during the second half of the quarter.

We haven’t yet seen any changes to these trends in our businesses early in the fourth quarter, which suggests we’ll be operating in a difficult environment this holiday season.

Now let’s take a closer look at our segment results -- overall our marketplace business segment achieved net revenues of $1.4 billion, a 4% increase over the year-ago period. Transaction revenue increased 1% and marketing services revenue increased 29% over last year. Marketplace’s revenue growth decelerated by nine points from Q2 primarily due to slower GMV growth and a stronger U.S. dollar.

Our online comparison site, shopping.com, was significantly impacted by changes made by search engines that disrupted shopping’s traffic this quarter. This business decelerated sharply in Q3 impacting marketplace’s revenue growth by about a point. We expect that shopping.com will continue to negatively impact our growth rate for the next three quarters.