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Thu Mar 5 2009 17:25:14

eBay CEO John Donahoe at Goldman Sachs Conference

By: Ina Steiner

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eBay CEO John Donahoe and CFO Bob Swan gave a presentation at the Goldman Sachs Technology and Internet Conference on February 26, 2009, in San Francisco. Some of my notes follow, you may still be able to listen to the webcast through a link on eBay's Investor Relations page.

Fees
When asked about zero insertion fees, Donahoe said, "One of the historical leanings from eBay is that a little bit of skin in the game from the seller is a really important screening mechanism."

When asked whether insertion fees could go all the way to zero, he said it would vary by category and country, but, "It won't go up. It will go down over time. But there's nothing planned this year in that front. We made the structural changes we needed to on that front last year."

Trust, Search and Category-Specific Shopping Experiences
"We must improve trust on eBay. I am tired of and done with us providing a sub-optimal experience," said Donahoe. "We made important progress last year, we will continue to make progress this year to improve trust on eBay." He said eBay would continue to improve the buyer experience on search. And eBay will work on category-specific shopping experience around Books, movie and video, Consumer electronics, Clothing shoes and accessories - "that will be good for both buyers and sellers as we customize the categories."

No TV Advertising
While Donahoe did not rule out television advertising at some point in the future, he said eBay's highest growth opportunity is to retain current buyers and grow their share of wallet. The actions eBay has to take to accomplish that will also attract new buyers, he said.

Negotiating Deals with Service Providers
Donahoe quelled rumors that eBay would roll out an in-house fulfillment service for its sellers, but said eBay would provide tools and incentives for sellers to provide great shipping. Chief Financial Officer Bob Swan said eBay would "leverage our collective community to negotiate the best rates possible."   

Classifieds and Local
Online classifieds is growing very aggressively. eBay saw 15 percent growth in that business and in that format last year. "You'll see us take the classifieds format and the eBay format and blending them in certain countries. We're doing that right now in Spain and in France. I think you'll see the whole local market, the lines that had held us back, start to come down. We'll be going after that market aggressively."  

Bailout Money and Bill Me Later
When eBay's CFO Bob Swan was asked about the risk of Bill Me Later (BML)'s debt, he said BML leverages the great cash flow of eBay's balance sheet and said they are very excited about their ability to finance the growth of that portfolio while managing risk on a transaction-by-transaction basis.

"And if that fails, we can always go get TARP money," Donahoe said. "Seriously. I make a bit of a joke, little did we know when we bought it. But we have an innovative way to extend transactional credit, which I think is (unintelligible) underwriting characteristics."  

TARP stands for Troubled Asset Relief Program, the government bailout program to buy mortgages and other troubled assets owned by financial institutions.

"We are not anywhere near needing TARP, and we think we have a lot of potential," said Donahoe. "I think we both feel even better today than the day we bought it."

Some Comments
Donahoe is not backing down from any of the changes eBay has rolled out, I would expect more of the same.

The fact that eBay thinks of itself as a company that might qualify for TARP was eye-opening to me. With Bill Me Later, they think of themselves as a consumer lending firm. But given that eBay has over $3 billion in cash sitting offshore, it's really hard to figure out why TARP was even on Donahoe's mind.

Does anyone else think analysts have an unhealthy obsession with margins?

More Thoughts and Conjecture
John Donahoe may be beginning to see eBay more as an ecommerce financial services firm - on a transactional level - than as a marketplace business. With PayPal and Bill Me Later in its portfolio, eBay may look to related services when searching for acquisition opportunities. Zuora, Prosper, Mint are examples of the range of Web 2.0 "financial services." (Interestingly, PayPal's CEO sits on Zuora's board, and eBay's VP of Global Billing - Payments sits on the company's advisory board.)

PayPal's Merchant Services business is strong, and mobile payments and micropayments present growth opportunities. But eBay isn't the only ecommerce company in online payments, and Amazon is encouraging developers to work with its FPS platform, enabling it to power some innovative services.

Lastly, Alibaba is in town chatting up eBay, Amazon.com, Google, Yahoo, Microsoft, Starbucks, and GE about possible partnerships. Could Alibaba be interested in taking Skype off of eBay's hands? It seems in some ways quite unlikely, but interesting to think about.





Comments (90) | Permalink

Readers Comments

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: eBuyer Feedback

Thu Mar 5 17:37:53 2009

He claims to have made improvements on trust last year but I recall customer satisfaction dropped 4%.

http://www.auctionbytes.com/cab/cab/abn/y09/m02/i18/s02

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

This user has validated their user name. by: Ming the Merciless

Thu Mar 5 17:54:53 2009

Yo, Ho!

Guess where the money came from for your Bill Me Later acquisition?

Your bank's TARP 'loan' a few days earlier.

The day our government gives ebay as much as one penny in bailout money is the day I become an armed revolutionary.

The Ho has become delusional.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

This user has validated their user name. by: Ming the Merciless

Thu Mar 5 17:59:19 2009

The Ho and The No should read the emails I receive from customers.

My customers loathe most of the changes ebay made last year and are just waiting for a viable alternative to emerge.

Not one customer who's expressed a point of view about the Ugly new Face Face of Ebay has been positive. NOT ONE!

The notion that ebay is going to get a larger share of the wallets of existing customers is ludicrous as more desirable sellers leave ebay.

Such thinking merely illustrates just how detached The Ho is from the reality of the ebay marketplace.

Is he mentally ill or what?

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: ebay = penny stock

Thu Mar 5 18:26:24 2009

More Donna Hole spin.

USS ebay is sucking in more water.

Bets have it the Ho will be gone by May 1.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: TARP my A$$

Thu Mar 5 18:35:48 2009

How's those changes workin' for ya John? Eh?

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: Patricia

Thu Mar 5 19:14:19 2009

Its always fun to see a smug over-priced CEO squirm and John has been squirming since last quarter's disaster and will squirm even more when this one hits the public eye...next month?  Sure John is already talking Tarp...he hit them up for Bill me Later - what makes us think that is not uppermost in his mind?  He must keep up the illusion of success as long as possible....it just might come true....NOT!

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

This user has validated their user name. by: Ming the Merciless

Thu Mar 5 19:14:36 2009

Those of you interested to see just how out of touch these financial analysts, CEOs, and business 'reporters' are, are, "The Daily Show" from 3-4-2009 from Comedy Central and watch Jon Stewart's video collage of CNBC financial "advice."

Stewart commented that had he followed CNBC's advice over the last few months, he'd be a millionaire today...IF he'd started with $200 million.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: Black Is White

Thu Mar 5 19:21:07 2009

The recent Ebay “Town Hall” around the time of the Goldman Sachs talk was shocking.

Ebay’s massive detachment from reality and disconnect from the disaster that is ebay 2009 is inexplicable.

The “Town Hall” could have been from May of 2008 when the ebay execs told everyone how great the new changes were even though they punished honest sellers, driving them away from the site).

The “Town Hall” ebay execs were clueless. No, they were somewhere way beyond clueless.

By the time of the February 2009 “Town Hall”, ebay has had months to see all the many ways the May 2008 changes are failing; they’ve had many chances to hear the anger of sellers expressed in every way possible, they have had many chances to witness the flight of sellers to other sites and many chances to read the many online critiques of ebay’s current “management”.

Their response - “La, la la, la, everything is beautiful at the circus.”

Of particular note were the “Town Hall” words of the architect of ebay’s severely flawed feedback changes, Brian “A neutral rating is a negative rating because it isn’t a positive rating” Burke.

Black is white because it isn’t red.

He still maintains that there is something ethical about telling buyers that a “4″ Detailed Seller rating for a seller while punishing/suspending any ebay seller with a “4″ average Detailed Seller Rating.

Black is white because it isn’t red.

Burke also believes that an ebay buyer who does not pay for an ebay item should be able to leave an ebay seller negative feedback for an auction never completed. That’s like saying a consumer can sue a retailer for a slip and fall accident when the consumer never entered the retailer’s store.

Black is white because it isn’t red.

As has happened in past “Town Halls” a seller phoned in with his own statistics showing how the May 2008 changes have damaged his ebay business. And as in similar past calls, Burke quickly hauled out the data, saying ebay’s “research” showed that the seller’s real world experience hadn’t happened or was an anomaly.

Black is white because it isn’t red.

Well you know ebay, you could roll around in facts all day long…

Amazing that none of the ebay execs behind this train wreck have been removed from the site for poor performance.

Sad that some wise long time ebay execs who understood the site have fled. Even the creator of ebay’s disastrous new “Search”, Raghav Gupta, left. He maintains that ebay is misusing his creation. His parting shot to his former colleagues at ebay was a poem titled “Ode to Ebay” in which he wrote.

As with all blinding power
The custodians went slowly sour
Took the community for granted
Seeds of dissent met with dour
The ecosystem was finally salted.

Black is white because it isn’t red.

Ebay is bad because ebay isn’t good.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: TIRED

Thu Mar 5 19:21:57 2009

It won't be long for the HO!

Stock is tanking, todays close.

EBAY $10.46 -$0.35 -3.24%

Can't wait to see it below $10.00 anyone taking bets on that date?  

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: FeeBay

Thu Mar 5 19:41:31 2009

Well, I guess we now know that Ebay is never going to a free listing model.

I hope the stock keeps tanking, and Donamoron gets canned. He's so worried about the trust of the buyers when he does not have the trust of the sellers, who's success is linked to Ebay's overall success. The numbers don't lie, this guy needs to go.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: voodoo

Thu Mar 5 19:41:48 2009

TOMORROW

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: Auld Cynical

Thu Mar 5 19:43:50 2009

He's starting to sound like he know's he's blown it and he's looking for an alternative business plan that plausibly denies that fact.

This is getting more like Napoleon's retreat from Moscow every day.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

This user has validated their user name. by: Ming the Merciless

Thu Mar 5 20:14:17 2009

As for having "skin in the game," I'd say many ebay sellers have been skinned alive as they watched ebay destroy their business built with sweat or tears over several years for the sheer fun of watching "disruptive innovation" in real time.

I can hope only hope that ebay's rubber stamp, hand picked BoD wakes up next month and tans The Ho and The No's hides but good and then hangs them out to dry.

Death to ebay corp. in 2009.
NEG MEG (Whitman) in 2010.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: whats up

Thu Mar 5 20:16:46 2009

Hey Donaho I hear Michael Jackson is looking for a good song and dance man.

You have a lot of experience singing the praises of your leadership  while dancing around the facts.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: Black Is White

Thu Mar 5 20:26:00 2009

In my post above I wrote;

''He still maintains that there is something ethical about telling buyers that a “4″ Detailed Seller rating for a seller while punishing/suspending any ebay seller with a “4″ average Detailed Seller Rating.''

should have read

He still maintains that there is something ethical about telling buyers that a “4″ Detailed Seller rating for a seller IS GOOD while punishing/suspending any ebay seller with a “4″ average Detailed Seller Rating.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

This user has validated their user name. by: Ming the Merciless

Thu Mar 5 22:01:47 2009

If only my crap would sell at other places than eBay. I'm too lazy to setup my own site so I guess I'll have to keep selling on eBay and keep complaining about it.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: RicRoe

Thu Mar 5 22:14:12 2009

Donahoe... said eBay would provide tools and incentives for sellers to provide great shipping. Chief Financial Officer Bob Swan said eBay would ''leverage our collective community to negotiate the best rates possible.''  

Negotiate the best rates possible??

How so....PayPal shipping does not even provide proper tools to enable sellers to utilize the 4 different sizes of Priority Mail Flat Rate Boxes currently available.

A recent inquiry with the USPS as to why PayPal shipping does not offer the full line of Priority Mail Flat Rate Shipping returned the following...'' Dear USPS Customer,

Thank you for contacting usps online technical support. This has been a confusion on their end. All vendors such as paypal have the options to use all the same services you can use at the post office on their website. They can at anytime decide they want to use all priority mail options and program the shopping cart as so. You may put a suggestion with them to add this option but we are not restricting them from using those options.

Jan
USPS Internet Customer Care Center
icustomercare@usps.com

Is this how eBay and PayPal are working to ''leverage our collective community to negotiate the best rates possible.''  

As Donahoe and Swan spoke, they were ignoring the reality of the current PayPal failure to provide sellers with the tools already available to help lower shipping costs.

I guess having an MBA means you took the talking out of both sides of your mouth 101 course as part of the required curriculum.

Mr Donahoe lies and tells half truths to the public at every turn. Hopefully his days at eBay are numbered as he will either be terminated, resign or he will drive the company into the ground.

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: Ebay's Slow Death

Thu Mar 5 22:45:40 2009

Ming-

Keep it up, please!  I love your complaining!

I'm still selling my crap on Ebay too. But, I'm slowing dispersing it out to other sites. I figure Ebay is almost on life support, so it's time to be moving elsewhere. I'm finding there are almost too many opportunities, and can't make up my mind which ones would be best for my stuff.

Oophs, they are wheeling in the life support cart now:

Donahoe said, ''We must improve trust on eBay. I am tired of and done with us providing a sub-optimal experience,''

That one had me laughing out loud! Maybe they should get rid of Best Match, DSRs, all the ads, and stop treating Sellers like they are all dishonest.  He still can't seem to realize that the Sellers are also the Buyers on Ebay. Both have either left or are leaving.

The Ho is not real bright!

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: joe

Thu Mar 5 23:00:20 2009

I believe ebay's initail public offering opened at $18.00 (1999 dollars)and rose to $54.00 from there on it's very first day.
Today 3/5/09 it's at $10.46 (2009 dollars) which means it's actually $8.50 in 1999 Dollars...
But I guess they know what they are doing...right....My a$$ they do...

eBay CEO John Donahoe at Goldman Sachs Conference   eBay CEO John Donahoe at Goldman Sachs Conference

by: meh

Thu Mar 5 23:10:26 2009

"Ming-

Keep it up, please!  I love your complaining!"

Then encourage he/she/it to get a website; is this MingBytes, or can others have an opinion?

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