eBay has reported its fourth quarter financial results and revealed that revenue fell 7% to $2.04 billion, apparently its first drop in sales in 10 years.

The San Jose-based company's net income in the fourth quarter dropped 31% from the same time last year to $367 million while auction revenue fell 16%.

December traffic to the auction site was 4% lower than at Christmas last year, says comScore.

This is perhaps surprising considering that it may have been assumed credit crunched consumers would be hunting for bargains.

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

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