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Mon Apr 13 2009 10:17:59

Analyst Downgrades eBay Citing Numerous Concerns

By: Ina Steiner

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Sandeep Aggarwal, Senior Internet Research Analyst at Collins Stewart LLC, downgraded eBay to a Sell. You can read the full report on the company's website (note that it is a PDF file).

Aggarwal believes eBay's core Marketplaces "continues to suffer from structural problems causing market share loss and gross margin pressure and is far from rebounding. In addition, we are incrementally more negative about deteriorating trends at Shopping.com, gross margin pressure in Payments, and lack of promotional-infused boost in Q1. We are cutting our est. to reflect our increasing concerns on the downside risk to eBay's earnings." eBay is due to report first quarter earnings on April 22, 2009.

I found this comment particularly interesting: "In our view, eBay was very aggressive in promotional activities during Q4-08 including participation in Live Search Cashback, which temporarily boosted eBay's top-line (and affected margin). In our view, Q1-09 will not give eBay that level of boost."

Microsoft was giving eBay shoppers cash if they used its search engine to shop on eBay. While the promotion is still on-going, it doesn't seem to be a sustainable strategy long term. eBay's decision to partner with Microsoft may have provided short-term benefits, but I continue to hear from merchants concerned about their listings not showing up on Google the way they used to. Hopefully analysts will ask eBay about its relationship with Google and the ways it plans to drive traffic to the site at the upcoming conference call on the 22nd.




Comments (27) | Permalink

Readers Comments

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

This user has validated their user name. by: Bob

Mon Apr 13 11:49:48 2009

Where are the Somali pirates when you need them?

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Dman

Mon Apr 13 11:52:40 2009

Mmmmm...in a body bag.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: down down down

Mon Apr 13 11:58:33 2009

get out, get out, get out asap

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: ebay=penny stock

Mon Apr 13 12:47:26 2009

Won't be long before the morons will abandon ship with their parachutes firmly attached to their backs.

Ebay is doomed.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

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

Mon Apr 13 12:57:30 2009

While IMO Sandeep Aggarwal is correct, he missed at least a dozen more equally compelling reasons to rate ebay as a SELL.

No need to enumerate them all again, but suffice it to say ebay's core marketplace is anchored in quicksand.

One, two, three, fo The Ho & No gotta go!

NEG MEG WHITMAN in 2010.
Death to ebay corp. in 2009.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Daisy

Mon Apr 13 13:31:21 2009

I just don't see Ebay going in any positive direction. They're spread out so thin and now they're going to buy GMarket. They can't even run Ebay properly. I don't so much think Ebay is doomed, but I think Donahoe's helm as CEO will be over some time this year. What happens after that is anyone's guess.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Angela

Mon Apr 13 13:40:19 2009

There is really something wrong with eBay.  Their search engine doesn't work as well as Google, even on their own site!

3 times last month, I was searching for pieces I needed to fix my laptop.  I started off at eBay, but went to Google when my search there didn't give me the right results.  All 3 times, I found the parts I needed were on eBay after all.

I've used the site since 1997. I am hardly a newbie. If they can't make their search engine work for me, no wonder the sales are dropping.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Thomas Crowne

Mon Apr 13 14:52:13 2009

eBay Australia are being investigated by the Australian Federal Police over a ruse employed by members of their TRUST and SAFETY team whereby they ask for CASH BRIBES to be paid into their PAYMATE accounts, to allow certain items to be listed. Non BRIBE payers have been deregistered. Does anyone really think eBay in Australia gives
a FLYING FIG about their loyal sellers?
eBay are shocking liars, greed merchants and are about to come unstuck
when the public learns the results of the AFP and Consumer Affairs NSW Commission into their sordid and tawdry practices of deleting sellers who rightly report these CRMINAL ACTS!  

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Karma's a female dog

Mon Apr 13 16:18:11 2009

Woof Woof, I can only hope Ebay's idiot in charge bought his golden parachute using best match, because he bought a bag full of anvils instead! Sad indeed one goober could ruin over 10 years of our hard work & sales. John Donahoe, Kenny Boy Lay, Madoff, the poster boys for corporate fascist greedheads.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Former Seller

Mon Apr 13 16:50:09 2009

They should be concerned at ebay that things are going down the toilet there.

If they insist on continuing on the destructive path they are on, even more sellers will be gone and less buyers will bother to search there.

Too bad the exec's are more interested in doing what they think is RIGHT, rather than what is right.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Scriptorical.com

Mon Apr 13 17:02:53 2009

>>>>Aggarwal believes eBay's core Marketplaces ''continues to suffer from structural problems causing market share loss and gross margin pressure and is far from rebounding<<<<

I wonder what he actually meant regarding the word structural.

Perhaps:
(Biol.) Of or pertaining to organic  structure; as, a structural element or cell; the structural peculiarities of an person or a CEO.

Relating to or caused by structure, especially political or economic structure; ''structural unemployment in a technological society.

Relating to or concerned with systematic structure in a particular field of study, such as disruptive innovation or the behavioral sciences.

(snicker)

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Karma's a female dog

Mon Apr 13 17:24:46 2009

It's well known Ebay never reinvested a dime in upgrading their servers and cause rolling blackouts of listings due to their inability to reinvest. They keep all the funds outside of the USA's reach in tax havens to protect them from taxes & lawsuits.

1.5 MILLION less page views on Ebay in less than 1 year of Disruptive Idiotvation, good Job Donuthead!

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: jose

Mon Apr 13 18:22:55 2009

Look for an ebay paypal google deal.....

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Loops

Mon Apr 13 18:33:08 2009

Amazon does a great job being Amazon. Ebay does a horrible job at being Ebay. Amazon always did a great job at being Amazon and Ebay at once did a great job at being Ebay. Ebay no longer does a good job at being Ebay and there niche is slowing feeling in with defections to ecommerce and aggressive marketing by sellers to shop their ecommerce sites.

Ebay is a great way to acquire new customers for your profitable ecommerce site. The first sale goes to Ebay the rest go to you. Easy math!

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Patricia

Mon Apr 13 18:50:03 2009

I'm so happy to see at least one of these mental giants can see the writing that is clearly on the wall!  Up until now stock analysts have only seen Ebay's reserve of cash - NOT its present business model.  They kept feeding figures to prospective investors as if they knew buying Ebay stock would be a sure win!  Maybe NOW they will begin to see past Ebay's dwindling cash reserves and see what is REALLY going on within Ebay itself!

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

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

Mon Apr 13 18:52:38 2009

Ebay, StumbleUpon partnership stumbles

SAN FRANCISCO, April 13 (Reuters) - The eBay and StumbleUpon union stumbled on Monday after the social networking site's founders, Garrett Camp and Geoff Smith, said they bought back the company with a group of investors, including Accel Partners and August Capital.

More hilarity ensues here:

http://snurl.com/ftw3q

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

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

Mon Apr 13 19:04:10 2009

This is a high value content, must read article!

"Value-trap" eBay vs "priced to perfection" Amazon

By Alexandria Sage - Analysis

SAN FRANCISCO (Reuters)

(Just a couple of choice excerpts:)

Solaris Asset Management's Tim Ghriskey:

"At this point, the Street basically calls eBay a value trap," he said. "'It's cheap, but it's cheap for a reason. Things aren't going to be better; they'll get worse.'"

AND this obviously written before ebay admitted it no longer has the patent rights to a crucial piece of Skype technology:

The online auction pioneer is touting impressive growth at its PayPal Web payments service and Skype Web telephone company -- once-auxiliary units -- while trying to assure Wall Street it can invigorate its stalled marketplaces business which has been hit by competition from Amazon and others.

"They admit to a lot of mistakes and they have a very ambitious plan to turn the company around over the next couple of years," said Solaris Asset Management's Tim Ghriskey.

But he cautioned: "The Street basically doesn't believe they're going to do it."

Read entire article here:

http://snurl.com/ftwub

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Kal

Mon Apr 13 20:22:11 2009

This couldn't happen to a ''nicer'' company.

What a bunch of Jackasses. For the past year and a half sellers have been SCREAMING that everything that was happening was a mistake. eBay turned a deaf ear. eBay is only interested in the money, nothing else. Well, now, FINALLY, the ''money'' (The Street) is starting to comment that there is something very wrong with eBay.

Perhaps eBay will listen to the NOISE that The Street makes. Perhaps some positive change will occur, if it isn't already too late. I think the only thing that would pull sellers back is John Doughnuthole being GONE. One can still hope.

NEG DONAHO in 2009

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

by: Mike DiFrancesco

Mon Apr 13 20:56:14 2009

I have learned that when on line some nerd will make you do the same thing in a differant fashion and that is what is hurting Ebay in the searches while it worked they changed it ,but why?,of corse with other iussues hindered it also I say if it is not broke dont fix it but they want to bleed the sellers for more money.Another issue is punish the unreputable sellers not all of us.My sales have droped I get less than 4 years ago,and they better look out for the small stores after all 100 pennies makes a dollar.1 bad or neutral feedback in 200 will drop you and there are 5 crazy people in every 200,do the math, 3 nutrals will ruin you.They trashed a good thing that took over a decade to build up.Give the sellers a break now and they will profit in the future,after all without sellers and stores you make zip or $0 for Ebay.

Analyst Downgrades eBay Citing Numerous Concerns   Analyst Downgrades eBay Citing Numerous Concerns

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

Mon Apr 13 22:32:10 2009

@ Thomas Crowne

Could you please post a link concerning the Australian investigation you cited?

I didn't find anything on Google, and naturally inquiring minds want to know :-)

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