Just a bit if housekeeping to get out of the way before I delve into the meat and potatoes of this article. By now, most of you must have read about my blown call on Infosys (INFY) last week. Our proprietary model was advocating going dark (short) on the shares before their earnings report. However, in the two days prior to the report, shares rallied about INR 250 or so in India and here Stateside on almost 2x the average 10-day volume, which led my team and I to wrongly conclude that sentiment had changed or information was out in the Indian market that favored going long despite what our model was telling us. Bad call which hit us hard in the pocketbook. Having said that, it's easy to pontificate after the earnings on how right one's call was and how vindicated one might feel after the results are out, however, you will never see that with me. Right or wrong, I will always tell you what I am doing with a particular investment/trade prior to the call and in addition, if I am advocating a short or a long, why would I not have my own money where my mouth is? Having said that, I am moving on to my next recommendation and I hope you will move on with me too.
eBay (EBAY), the online auction giant, is set to report earnings for its March quarter after the close of regular market trading this afternoon followed by a conference call at 5 pm eastern. Current analyst consensus calls for earnings of $$0.62/share on revenues of $3.77 billion for the quarter ended March 31, 2013. The range on earnings is $0.53/share to $0.65/share with revenue range of $3.68 to $3.9 billion. For the current June quarter, consensus is earnings of $0.66/share on revenues of $3.95 billion. For FY13, sellsiders are modeling revenues of $16.4 billion and earnings of $2.75/share.
In March, eBay had their analyst day where they guided non-GAAP earnings growth of between 15-19% for the years 2013 through 2015 and revenues of at least $21.5 to $23.5 billion for FY15. Must be nice to have a crystal ball, no? Seriously, for a company that operates on the cutting edge of technology to guide three years out is incredibly reassuring from an investment point of view since the management team does not have a reputation for wild statement ala Steve Ballmer et al.
Our proprietary model called for a no trade on YHOO and all we did was sold calls against our long held shares. The model is bullish eBay and that's how we are positioned through a combination of shares and calls.
Until the next time, safe and happy investing.
Good luck going into eBay's ER tonight, long, short or agnostic.
Additional disclosure: short goog and yhoo calls, long ebay calls