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Mon May 17 2010 21:50:27

Analysts Generally Patient with eBay Turnaround

By: Ina Steiner

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There are plenty of people who are worried that the best years of eBay are behind it, despite a promised turnaround by eBay CEO John Donahoe. Marketplace sales (GMV) in the first quarter of 2010 grew 8% year-over-year excluding vehicles, foreign-currency neutral, and excluding Gmarket (eBay's Korean subsidiary). eBay traffic has declined year-over-year while Amazon.com 's traffic continues to climb. And there are continued concerns about sales since radical changes (fees, Stores in Core) took effect at the end of March.

However, Wall Street analysts have been generally patient with eBay's turnaround efforts, according to reports out this month.

Colin A. Sebastian of Lazard Capital Markets wrote in early May, "With much of the investor focus at the event on reports of flattening eBay volume in April, we believe the data should be viewed in the context of the disruption to some sellers from recent Marketplace changes. We note that the upturn in Europe Marketplace trends began 1-2 quarters following similar changes, while the April transition period should be largely reflected in eBay's 2Q guidance."

Sandeep Aggarwal, now of Caris and Company, wrote last week, "Marketplace turnaround has come a long way and eBay is getting ready to grow above overall E-Commerce growth, 2) Street is under-estimating the revenue contribution from PayPal, 3) margin upside from Marketplace turnaround, BML ramp, and Gmarket integration not reflected in stock price, and 4) fee changes make eBay a more compelling marketplace for merchants and offer higher selection for buyers. We believe that our/Street estimates have significant upside for the next several quarters."

And Mark Mahaney of Citi said last week, "EBAY's valuation is reasonable, but it's still unclear whether eBay is a turnaround story and can grow its Marketplaces in-line with overall ecommerce growth rates in '10. Our detailed SOP Sensitivity Analysis in our 3/31 "Tale of Two Cities" report shows a path to valuation upside. But our fundamental Marketplace concerns are, at the margin, greater. And a positive catalyst is hard to identify..."

A less positive note came from Jim Friedland of Cowen Group who wrote in his weekly Internet and New Media report today that one of the conclusions offered by a survey of 1,000 U.S. Internet users on a wide range of online habits was that "Amazon has displaced eBay as the best website to find low prices."

Mark Mahaney met with eBay CFO Bob Swan and with President of Marketplaces Lorrie Norrington, who explained that "seller initiatives have been working to stimulate the number and quality of listings by top rated sellers (TRS now account for 30% of GMV)."

Expect that percentage to grow as eBay continues to promote Top Rated Sellers. eBay will ratchet this up in time for the holiday shopping season, with special plans to promote Top Rated Sellers who offer free shipping and expedited shipping in particular.




Comments (57) | Permalink

Readers Comments

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: Well Duhhh

Mon May 17 22:20:12 2010

''Amazon has displaced eBay as the best website to find low prices.''

Well, duh! That's because it's cheaper to list on Amazon.

WHAT? It's cheaper? Really? Well, maybe it would be more accurate to say that sellers get more BANG for their BUCK at Amazon. It's not necessarily cheaper per sale, but when you make it up in volume, exposure, and fewer hassles from scamming buyers, then it's certainly a wiser investment for sellers.

Ebay is an old nag who ain't what she used to be, ain't what she used to be, ain't what she used to be many long years ago. Time for the glue factory.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: I'm A TRS

Mon May 17 22:25:41 2010

Okay, so I'm a TRS, but I'll be darned if you'll find me offering ''expedited'' shipping option.

It's a trap! Don't fall for it. eBay wants to encourage upgraded shipping? NO way, Jose!

I'm no fool! I can see it now: if I allow my customer to upgrade to Express Overnight shipping they'll surely hit my stars for ''overcharging'' on shipping.

No thank you.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: Smitty This user has validated their user name.

Mon May 17 22:35:53 2010

Analysts were also very Patient with Enron. Skilling was feeding them the BS then and Donahoe is doing the same thing now. Wall Street is generally clueless till it hits the fan. Made off is a perfect example.

Smitty

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: Patricia This user has validated their user name.

Mon May 17 22:37:54 2010

Tell me - were Norrington and Swan holding pitchers full of Koolaid???  What an utter disasterous joke Ebay has become and the analysts waiting for that huge turnaround (about the size of the big bang) hover over each quarter and then make excuses that the event hasn't happened yet.  I really can't understand that aspect of this since they wouldn't give this much leeway or make this many excuses for any other business!  As for Paypal...LOL, that's a turnaround I'M waiting for....waiting for someone like VISA to creep up and slam Paypal to the ground.  I believe it will happen quick and without warning.  Its only logical that the big CC companies want those juicy fees paypal has been getting.  Once that happens - turn your backs if you have no stomach for the carnage.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: I'm Sorry

Mon May 17 22:40:51 2010

Sorry, but eBay profits at the expense of sellers is not sustainable. Sellers will either go out of business or leave ebay. It's a short term gain. A bubble that will burst.

LOL@"Well Duhh" and the "old gray mare" line.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: another side of the coin

Mon May 17 23:08:57 2010

''eBay will ratchet this up in time for the holiday shopping season''... they mean cattle prod the sellers into offering free expedited shipping.

Maybe eBay is hiding sellers listings now with low to zero sales so they will look good during the holiday shopping season. I guess they are hoping these virgin new sellers they are currently recruiting will be ready by then to conform to all of eBay's commands.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: who knows

Mon May 17 23:20:49 2010

I read this with interest: ''Colin A. Sebastian of Lazard Capital Markets wrote in early May, ''With much of the investor focus at the event on reports of flattening eBay volume in April, we believe the data should be viewed in the context of the  disruption  to some sellers from recent Marketplace changes.''

I guess if one has to blame the financials on something, this is as good a reason as any. Then I wonder, reporting coming out, marketplace changes,hmm, timely I guess?                              

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: The Emperor

Mon May 17 23:21:47 2010

This is the stock market equivalent to ''Waiting For Godot''

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: A. Rubbernecker

Mon May 17 23:46:42 2010

Patricia said ''Once that happens - turn your backs if you have no stomach for the carnage.''

Ahhh, I think that's something I'll slow down to gawk at. I won't look away. It will be kinda fun to watch.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: Troglodyte

Tue May 18 00:08:51 2010

Wall Street analysts aren't clueless. They're pimps for corporations, and most CEOs are their whores to put it simply and bluntly.

Brokerage firms make money when their clients buy and sell stocks and bonds -- either way they make money. Moreover, they use and abuse hedge funds to bet for and against derivatives and other financial instruments.

They have a vested interest in not examining financials too closely. If they did, the Wizard would be revealed for the incompetent fool that he is and the Emperor would be naked for all to see.

More importantly, if the FULL truth were known no one would buy the stocks they push.

Makes me wonder just how much money may be passing under the table to obtain these nauseating "analyses."

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: whatever.

Tue May 18 00:25:58 2010

regarding Sandeep Aggarwal's assessment:

if he didn't copy that directly from an eBay hack in San Jose he should demand a pretty fee from San Jose for writing the fluffiest fluff piece--that has just enough strands connecting it to the real world that it might bamboozle his employer's clients.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: whatever.

Tue May 18 00:30:25 2010

And I will NEVER be a ''top-rated seller'' because I don't meet their ''rather modest'' volume requirements (as The Seller Advocate has termed them).

Actually I probably could meet the dollar requirement but I don't do this for a living so I can't spend precious time with ''delighting'' 100 low-value book buyers in a year.

And I will NEVER offer ''free'' shipping.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: whatever.

Tue May 18 00:35:15 2010

@the Emperor:

''This is the stock market equivalent to 'Waiting For Godot'''

OMG that is perfect.

I'm so jealous that I never thought of the comparison.

An utterly devastating retort.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: another side of the coin

Tue May 18 01:42:10 2010

or a Confederacy of Dunces

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: Penny auctions
Web Site

Tue May 18 05:10:45 2010

Hi,

I was reading an article the other day and in that article it was stated that eBay is hiding its facts and figures from the general public and using fake auctions to attract the public interest on eBay.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: SleepyTime

Tue May 18 05:51:54 2010

I agree with Smitty.  It is pretty funny to find this article on Auctionbytes this morning when last night CNBC again aired 'The Smartest Guys in the Room' the storyline of Enron.  What was interesting to me was the stock analysts who took everything at Enron's word.  The one guy who didn't was strong-armed out of a job.  

Quite frankly, I don't think Johnny Boy is any where near the smartest guy in the room.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: Marvin This user has validated their user name.

Tue May 18 06:11:52 2010

''Wall Street analysts have been generally patient with eBay's turnaround efforts''

This shows analyst are clearly as clueless as ebay, there was nothing to TURN AROUND.

Before donahoe took over ebay was accused of being a monopoly, it was to big, if you wanted to sell online ebay was the only site to sell on. You could buy or sell anything on ebay. The name Amazon was rarely mentioned in comparison to ebay.

Two years after donahoe ebay is in the toilet. You can't buy off ebay like before and sellers are complaining of little or no sales. Amazon is the household word ebay used to be. It got so bad ebay commercials had to say ''Come to think of it. eBay''.

ebay now has to mislead people into thinking how well they are doing. The ways ebay and paypal finds to take customers money and hold it are horrible. donahoe goes on TV, contradicts himself, stutters, makes statements so misleading he is either delusional or outright lying. Makes asinine comments like - ebay users are his children, ebay is hot then it's not, Amazon is hot, then it's not then it's hot again then it be not.

The numbers don't lie. Stock prices alone since donahoe took over ought to be an indication to ''analyst'' there was a turnaround alright, but in the wrong direction.

The first week in January 2008 ebay stock was trading at $31.30 per share. In comes donahoe and his ''disruptive'' marketing. In January 2009 ebay stock has dropped over 50% to $14.19!!!! By January 2010 things had not improved much, stock was only trading at $23.51, well below the Pre-donahoe value and as of today it's even worse trading at $22.51.

ebay is the victim of greed and corruption, they were so big they thought they could pillage their users and put Amazon out of business. It all backfired.

If it weren't for ebay, today when you say:
Amazon people would think of books and their stock wouldn't be trading at $128 a share ($106 a share higher than ebay, come to think of it).
eCrater, Bonanzle, Etsy most people wouldn't know what you are talking about.
Craigslist would be something people have heard of but not a biggie.

Today these sites are growing like crazy because of ebays garbage policies and management. donahoe is the best thing that ever happened to E-commerce, people now have more places to sell and don't have to rely on ebay. In the future things will get much, much better. ebay is making selling on other sites easier and more profitable each and every day.

Keep being patient analyst.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: fat frog

Tue May 18 07:05:37 2010

Most of these wall street types are either walking around in a daze or are in a complete coma.

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: Hardrock Rules

Tue May 18 07:30:31 2010

HONEST TO GOODNESS ! I sell Auctions and ixed Price, I am TOP RATED, but.......

My Fixed Price NEVER EVER SELL, NEVER ( (Maybe 1 a moth if I am lucky ) - If Donahoe pulls the plug on Auctions he has sunk my family, finally.

AND YES, AUCTIONS ARE NOT AS PLENTY ON EBAY AS THEY ONCE WERE THAT IS OBVIOUS, BUT THEY ARE STILL A PART OF SOME SELLERS STRATEGY TO EARN MONEY

BUT DONAHOE IS TRULY ARROGANT ENOUGH TO MAKE THAT CHANGE ALSO, OR BURY AUCTIONS IN BEST MATCH - MARK MY WORDS HE WILL

Best Match SUCKS ! I mean I list many Fixed Price, and I am Top Rated, and NEVER a freakin sale in the course of a month, maybe just 1 from Fixed price if I am damn lucky, my only sales are coming from Auctions, and even then a few dollars above my cost with RARELY MUTIPLE BIDS

The site is truly freakin DEAD ! There is no traffiic no bidders, and no fixed price buyers for me period. Yet Donahoe keep tweeking and punishing selelrs FREE AGENCY to sell, I am wasting my money listing fixed price, even being TRS my listings are buried, BEST MATCH is thievery in my opinion

I kid you not, I made $30,000 up to $40,000 profit one year with with ease until Donahoe  and his Disruptive innovation came along now I make about $12,000 a year and we get food stamps (SNAP)

What the hell is Wall Street waiting for to turn around ? DONAHOE FAILED EBAYS SELLERS ! And his damage is not done, just wait till before the Holiday this year, he has got to put a nail in the coffin for good, and store to core just about did

Analysts Generally Patient with eBay Turnaround   Analysts Generally Patient with eBay Turnaround

by: another old gray mare

Tue May 18 07:39:30 2010

With eBay stock selling at such a low price, why don't all eBay sellers buy one stock?  Then we could all vote Donahoe out and perhaps get some competent management in place.

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