San Jose (CA) - Online auction giant eBay posted higher profits that beat analysts’ expectations, but shares sank after the company said buyers were paying less per item. Net income for the 2nd quarter rose 22% to $460.3 million, but the average selling price for items fell 6%. This news rocked shares late Wednesday causing them to drop nearly 7%. As of 2:48 PM Eastern today, shares were down $4.10 to $24.00/share.

Company executives blamed the lower selling price on the poor economy, something that could portend slow growth for the rest of the year. That sentiment was backed up by gross merchandise volume figures that show an 8% growth, which is the smallest increase in five quarters.

eBay subsidiaries showed impressive gains. Online payment processor, PayPal, showed a 33% revenue increase to $602 million while Skype grew 51% to $136 million.

Read more ... eBay 2nd quarter results (links to PDF)