eBay: First Quarter Looks Rocky

eBay’s (EBAY) fourth quarter wasn’t so bad, but the first quarter outlook was disappointing. And the company, on its conference call, declined to give guidance for 2009.

Here’s the scorecard (statement):

• eBay’s fourth quarter earnings were $367 million, or 29 cents a share. Excluding items, earnings were 41 cents a share, two cents ahead of Wall Street estimates.
• Fourth quarter sales of $2.04 billion was light relative to expectations of $2.12 billion. eBay cited a strong dollar and a weak economy.
• Margins continued to fall in the fourth quarter. eBay said operating margins were 22.3 percent for the fourth quarter, down from 28.7 percent a year ago.
• The first quarter outlook fell short of projections. eBay sees first quarter revenue of $1.8 billion to $2.05 billion with earnings excluding charges of 32 cents a share to 34 cents a share (21 to 23 cents a share under GAAP). The problem: Wall Street was expecting earnings of 40 cents a share excluding charges on revenue of $2.1 billion.

For 2008, eBay reported earnings of $1.78 billion on revenue of $8.54 billion. Despite all the abuse eBay takes as a business, it’s an operation that throws off a lot of cash. In 2008, eBay had free cash flow of $2.3 billion. You could do much worse than $2.3 billion in cash flow.

A few interesting nuggets (click to enlarge slides):

• eBay’s marketplace unit–eBay primarily and other e-commerce sites like StubHub–saw sales fall 16 percent in the fourth quarter to $1.27 billion.

• The payments unit–PayPal and Bill Me Later had revenue of $623 million in the fourth quarter, up 11 percent from a year ago.

• Skype had revenue of $145 million, up 26 percent from a year ago but roughly flat with the third quarter tally of $143 million. Skype added 35 million new users to end up with 405 million total.

• Bill Me Later has tightened its credit standards.

Comments

[Wake-Up!:]

Why does this come as such as surprise to people? eBay's customers (the sellers) have been trying to explain to the deaf ears at the helm and to the shareholders that John Donahoe's new vision of the future was a complete disaster and would destroy the very fabric and foundation of this once great company. They called it "noise" and slammed the door in our faces.

No one can afford to sell or buy on eBay these days. When growth rate slows, eBay's answer is to raise fees and remove seller protection. They've given full reign to the scammers and dead beat buyers. And they go about it in a deceitful and very sneaky way.

You remember eBay's headlines last February to it's customer (sellers)?

"You asked and we listened. We've lowered listing fees and "adjusted" final value fees". In other words - you just got screwed again!

These types of misleading and deceitful practices could only mean one thing for eBay.... Complete destruction! Do they really believe we as business owners cannot see through their BS?

Abandon ship while you can! This tugboat is sinking fast.

Free from the fees: www.Bonanzle.com

Jan 22 09:43 AM

[e-DUDS:]

I was not able to sell a brand new pair of trousers for £1 last week. Seriously, not only have the sellers gone, but they have taken the buyers with them.
I hope now that there is more room for small niche website like mine to take some more of the market share. I don't know what eBay can now do to pull themselves back from the brink.

I heard that they were givine out vouchers to make up for negatives received. That smacks of total desperation to me.

Jan 22 10:05 AM

[Wake-Up!:]

eBay has also announced another revision to their scammer (I mean buyer) policy.

PayPal spokesperson Michael Oldenburg says that since eBay imposed its new "paperless payments" policy, guest visitors (supposed buyers that don't have to fully register on the site before making their purchases) may now make up to 15 purchases as this type of "guest".

This means that they do not have to fully register on eBay to get their items for free - I mean buy and then get their items for free.

Boy.... eBay sure is taking a bite out of crime and deterring all those credit card thieves from using those stolen cards more than 16 times!

Thank goodness for the brain stormers at the helm!

Jan 22 10:28 AM

[leapingcat:]

We are now seeing the results of Ebay's change in policies last year. In spite of the spin that is being put on it, Ebay's financial performance is worse than can be accounted for by a downturn in the economy, and is worse than that of comparable companies.The Ebay magic has gone, for buyers, who find that they cannot find what they want, but have searches manipulated against them, for sellers, who find that they are getting reduced visibility in return for higher fees, for employees, 10% of whom have lost their jobs, and investors, who have seen their holdings plummet in value. and all for what.....nothing. It IS realistic to bring back Ebay 1.0; I am sure that there are more former buyers and sellers out there who would be willing to return if ebay once more became a fun and cost-effective place to trade, than those, if any, who have come in as a result of the way Ebay has gone.

Jan 22 10:43 AM

[Patricia013:]

Ebay is no longer "recession proof" as Meg Whitman bragged some time ago. John Donahoe has chosen the darkest path he could and he destroyed a business model that worked well and only needed tweaking. He turned his back on the sellers who made that site what it is and called us "noise" - now he can pay the piper for the stupidity of his decisions. His "disruptive innovation" worked...in that it destroyed a healthy and wealthy company in less than a year. Sellers have been predicting this for months now - and even predicting that Donahoe would no longer be able to hide his failure after the 4th quarter. Well....now we can all say I TOLD YOU SO! Sad, but this ship is sinking and if you think the 4th quarter was "disappointing" just wait till you get a load of 1st quarter 2009! How much longer is board going to sit still and watch the destruction?

Jan 22 11:49 AM

[morleyadams:]

Donahoe is ebay's ENEMY! His and Meg Whitman's "Disruptive Innovation" SCHEME has destroyed the site! The superb buyers and sellers are abandoning that sinking ship!

ebay raised fees TWICE last year against it's users, WHILE giving FREE listings to mega sellers, now called "Diamond Sellers". Donahoe has enforced policies which REQUIRE sellers to LIE to and about their buyers! The majority of members are FORCED to use Paypal and sellers are NOT allowed to tell buyers that they accept other forms of payments. Sellers can ONLY leave positive feedback for their buyers (REGARDLESS) and sellers are being suspended for being truthful in their feedback COMMENTS about bad buyers.

Censorship of ebay's discussion boards is at an all time high, as ebay attempts to hide the truth from the media and shareholders! Read threads at ebay discussions, "The Soapbox", but read quickly, posts and threads are removed quickly and users are being suspended for being HONEST!

Read Paypal's amended User Agreement to discover that Paypal (owned by ebay) can now withhold ANY users funds for up to 180 days at Paypal's "sole Discretion"! There is no arbitration process...Paypal IS the judge, jury and executioner of funds withheld from users. Funds that are supposedly NOT being withheld are being processed at slower rates and an enormous number of "Glitches" have denied users access to their funds for extended periods of times in order for Paypal to increase it's revenue. This house of cards is a dangerous game.

SEARCH the internet for "Ebay Stockholders and Sellers Calling For Immediate Termination of John Donohoe CEO Petition" at petitiononline to see what ebayers are REALLY experiencing!

Go to glassdoor dot com to read what ebay's own employees are saying about Donahoe and the horrendous upper management he has surrounded himself with.

There's NO HOPE for ebay UNLESS it's HQ is purged of those deliberately destroying ebay, including Donahoe.

Jan 22 12:19 PM

[Watching th...:]

Walmart is doing OK. Ebay "should be" too, but isn't. Poor management thought to reinvent the wheel.

Well, it did get disrupted.

Jan 22 01:21 PM

[J.Donohoe:]

Sellers greed to make profit, and not value the core business agenda has destroyed eBay. If you want to blame someone, blame the sellers!

Jan 22 01:29 PM

[Leftfield:]

Mr. Donohoe, I'm a small seller and I have two nonpaying "buyers" this week. Used to be 3-4/year. When they leave 0 DSR's will I get suspended selling on Ebay again?

Jan 22 01:43 PM

[wheresmymoney:]

J. Donahue aboves remarks that sellers greed has brought down eBay is false!!!!! John Donahue and his dictaorship policys as forcing us sellers to use PayPal, not accept check or money orders from "our" buyers; not allowing us to leave negative feedback for bad buyers, who don't pay us, who return things they have damaged themselves, who falsely accuse us sellers of things that aren't true, raising fees on us, expect us to supply free shipping, etc etc, has brought ebay down to a level lower than the origianl stock prices started at. He will destroy ebay totally if the board of stockholders, don't get rid of him. If they were smart they would fire him and make ebay the way it was. Us small sellers, the ones that "make the noise" and sell flea market trash are the ones that made ebay the billionaires they were. I think they are not billinonaries anymore. You give John Donahue enough rope, and he will hang himself. If you stockholders want to keep your stocks from becoming penny stocks, fire him now and hire someone that will be fair to sellers and buyers. Most of us ex ebay sellers and powersellers have left ebay, and gone to other venues, or started our own websites. We have brought our loyal cusotmers with us. GoDaddy, Go Antiques, etc are starting new auction venues and will eventually put ebay out of business. Sell, Sell, Sell, your stocks before they are penny stocks, or fire Mr. Donhue who is the number one cause of ebays slowly dying death!!!!!!!

Jan 22 01:47 PM

[Et tu, Brute!:]

I have to say, this cookie (ebay) started before the recession caught full stride, AND, by that time, Wall Street had already caught on that their were problems that could be aligned with Donahoe taking the realm.... I mean helm! Freudian slip there.

Apart from the scattershot individuals that are still certifiably clueless, Wall Street's got it figured out now and knows wherein the problem lies.

Jan 22 02:28 PM

[another.ana...:]

"Despite all the abuse eBay takes as a business, it’s an operation that throws off a lot of cash. In 2008, eBay had free cash flow of $2.3 billion. You could do much worse than $2.3 billion in cash flow."

Yeah you could do much worse than 2.3 billion in cash flow---and wait a short while & eBay WILL do MUCH WORSE.

Ayuh

Jan 22 06:28 PM

[Bob C:]

Isn't it funny how most of the other eBay units made money in Q4?
Each of these acquisitions were purchased with the profits of hard working, honest sellers paying fees to eBay.

Each company was started by others, much smarter than the overpaid bigwigs running the Mother company.

Now Mother is pregnant again, bloated like a 10 week old beached whale.
Rotting, stinking, and in need of more support from her children.

Too bad! The children have left home.
They have moved out on their own, or have been adopted by others, ones that really care about them, and treat them like real people, not just a statistic.

If you are in need of a home, please at least give Bonanzle a try.
Just go to their forums and post a statement such as:
"I'm thinking of selling here"
and see for yourself the kind of friendly welcome you will receive.

Jan 22 09:38 PM

[5563:]

I can see the paid ebay cheerleaders are here. Ebay is a joke. Amazon posted record holiday buying season numbers because they are a well run company and ebay/paypal is a greedy incompetent mess.

They have a reduced profit margin over 2007 even though they raised fees twice and they ran off all their seller/buyers with those increased fees, illegal ebay/paypal monopoly, feedback that no longer means anything but allows criminal buyers to bilk sellers out of their money and merchandise, and shill bidding is all over the place since they chose to end transparency in bidding.

Buyers know they are being cheated by shill bidding and they can't find what they want anyway due to Ebay not allowing them to see what they want, but what ebay wants them to see: The cheap plastic chinese crap the diamond power sellers are pushing.

Jan 22 10:04 PM

[o.c.d.colle...:]

Well...there IS such a thing as KARMA!

And ebay is simply reaping what they've sown!

That's Ok, the new "MY Ebay" program that rolled out the same day as the quarterly, will finish the job of "letting go of a very successful past".

Jan 23 12:10 AM

[a. palmer jr.:]

The problem with people like me selling on ebay now is that you just can't make any money. The fees are too high and too often. You have the listing fee, the final value fee,then when your money is deposited in paypal they take a cut, even including your postage. Then if you request a check they hit you again for $1.50. You would have to price your item higher than the sum of all the fees and postage to make any money and at that price most people would not be willing to pay.

Jan 23 06:57 AM