I would like to refer to "nobodysbuying" as my Assistant Director, because it was that ID who alerted me to this terrific news.
The full transcript is below:
http://online.barrons.com/article_print/SB123698552784425317.html
Monday, March 16, 2009
TECHNOLOGY TRADER
New Bid for Profit at eBay,
But Don't Buy It Now
By ERIC J. SAVITZ
EBay is no bargain.
LAST WEEK, EBAY UNVEILED A BRAND-NEW THREE-YEAR business plan, complete with a fairly dramatic change in strategy. While hardly abandoning its core Marketplaces business, the e-commerce giant now seems to be betting its PayPal online-payments arm can come to the rescue, while eBay (ticker: EBAY) refocuses the core site on selling used, off-season and end-of-life-cycle goods. In effect, eBay is conceding that a previous move to take on Amazon.com (AMZN) in mainstream goods has failed to meet expectations, and that the company needs serious repairs.
While known to many primarily as an online-auction site, eBay in recent years has expanded into fixed-price goods in a wide variety of product categories; meanwhile, its auction business has floundered. Attempts to fix the site by tinkering with fees, seller ratings, site-search and other features have met with widespread user irritation, but no improvement in performance. Over the years, eBay also has made some big diversification moves, acquiring online-payment service provider PayPal for $1.5 billion in 2002, and adding voice-over-IP service provider Skype to the fold in 2005 for $2.6 billion. (EBay shelled out another $530 million in 2007 under an earn-out deal with Skype's founders.)
The company laid out some aggressive targets, asserting that PayPal has become "a second core business" for eBay, with an opportunity to become bigger than its e-tailing business as soon as 2011. CEO John Donohoe dubbed PayPal "the next leading online global-payments network," asserting that it has "one of the most exciting and high-potential opportunities anywhere online today."
According to the plan, eBay expects overall revenue in 2011 of $10 billion to $12 billion, up from $8.5 million in 2008; PayPal is projected to reach $4 billion to $5 billion, up from $2.4 billion last year. As for Marketplaces, eBay projects 2011 revenue of $5 billion to $7 billion, more or less flat from 2008's $5.6 billion. Skype is expected to more than double, to over $1 billion.
It sure is tempting to declare eBay and its revamped strategy a bargain. The stock trades for eight times estimated '09 earnings; several analysts assert that when you back out cash, the current market cap is roughly equal to the value of PayPal plus Skype, giving you the core e-commerce business for nothing.
But to me, it feels like a value trap. For one thing, how can eBay claim to make a rational calculation on what results will be like in 2011, when it can't tell you what the numbers are going to look like in 2009? I can't take the forecast too seriously, given the level of uncertainty about the global economy and consumer spending for the rest of this year and beyond. And as many Street analysts noted last week, eBay failed to give many specifics on how it plans to fix the troubled core business.
Marianne Wolk, an analyst at Susquehanna Financial Group who is one of the few with a Buy rating on the shares, recently wrote a research note laying out ways eBay could boost its share price. There is widespread speculation that Skype is for sale; she also theorized that the entire company could be acquired by Google (GOOG) or Microsoft (MSFT). On a smaller scale, it could move into the fulfillment business, in competition with Amazon. Or it could expand in the developing world, perhaps by buying MercadoLibre (MELI) or GMarket (GMKT). But the company did none of those things last week; instead, it rolled out an ambitious, optimistic and none-too-specific three-year plan.
Seeing eBay's plan brought back memories of the three-year plan rolled out almost exactly a year ago by Yahoo! (YHOO); the company unveiled its own blueprint for the future to demonstrate that it didn't need to succumb to overtures from Microsoft in order to grow. Yahoo! gave forecasts for this year and next year that were well ahead of the Street estimates.
And you know what has happened since: the old estimates turned out to be too high, not too low. And Yahoo!'s stock price has fallen by about 50%.
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EBAY SUCKS : DO NOT Sell On Ebayby mrxchucky1,403 views
Thanks for posting. Add 5 more stars.
cappnonymous 2 years ago 3
Ebay thinks it's a pimp and treats the paying sellers as ho's! Scandalous no seller supporting company, we built you bitch!
azrentals 2 years ago 2