Earnings Preview: eBay

eBay (EBAY) is expected to report Q2 earnings after the market close on Wednesday, July 22 with a conference call scheduled for 5:00 pm ET.

Guidance

Analysts are looking for a profit of 36c on revenue of $1.99B. The consensus range is 34c-37c for EPS, and revenue of $1.94B-$2.08B, according to First Call. In April, eBay guided Q2 EPS 34c-36c on revenue of $1.85B-$2.05B. During the quarter the online retailer also announced plans to consolidate its North American customer service facilities which will result in the closure of its Vancouver facility. Many analysts are expecting eBay's earnings to drop this quarter which would mark the third consecutive quarterly decline. Though its PayPal business is still growing, eBay continues to lose customers to rivals like Amazon.com (AMZN).

Analyst Views

Mark Mahaney of Citigroup recently wrote that eBay "appears to be getting squeezed at the top end by direct online retailers" despite a very strong brand name and "what should be a reasonably recession-resistant consumer value proposition." But Sandeep Aggarwal of Collins Stewart believes eBay is addressing the structural problems of its marketplace business even though weak retail trends continue to hurt revenue.

Analysts and investors will listen for comments from eBay's management on the integrations of the Gmarket and Bill Me Later acquisitions.

Comments

[Et tu, Brute!]

During a particularly BUSY past week, ran into five acquaintances, all of whom used to be active eBay users.

The randomness of this kind of blows me away, because NONE of these people know each other or are connected, and are from vastly differing lifestyles and perspectives.

But they ALL used to use ebay, and buy AND sell there, and don't anymore because of the changes. None were serious sellers, but all had been serious buyers.

NONE of them use eBay anymore. None.

2009 Jul 21 11:30 AM

[Patricia013]

I was a serious seller on Ebay for the past 11 years. Now, I put up my five "freebee" listings each month and watch them roll off without bids. Who needs Ebay - its a thing of the past now...thanks to John Donahoe. I wish someone would do a study on the billions in revenue that man and his "disruptive innovation" cost the company!

2009 Jul 21 05:44 PM

[Philip Cohen]

You've all got it right, the ship is leaking badly; the latest finacials should make interesting reading, once all of Donohoe's spin is peeled off.

“Noise” Donahoe and some market analysts seem to believe that PayPal’s manning of the pumps will keep the good ship “eBay” afloat. I certainly would not put my money on the “clunky” PayPal for the long term. Assuming that the parties don’t already have some agreement to not compete, I have no doubt that eventually those other well known “loan sharks”, the major credit card companies, will get off their butts and introduce a similar universal card/terminal-less on-line payments system that the participating banks can incorporate into their internet banking systems—and [i]they[/i], at least, will do it properly—and that, my friends, will undoubtedly be the end of PayPal outside of the Donahoe-dwarfed eBay marketplace ...

I won’t get going on PayPal any further other than to recall that Donahoe has been quoted as saying that the door is slightly ajar for a potential spinoff of his company’s online payments unit. If this is correct it will be the first logical thought that this guy has ever had; he otherwise clearly has no idea of what he is doing at eBay. If that MBA taught him anything then he should be using all his skills to negotiate with the banks to take PayPal and integrate it into their online payments system—in exchange for an appropriate interest in the consolidated business, of course. Because, the more successful PayPal is, the more likely it is that the banks will finally get off their butts and introduce a like system; if and when that happens the banks will do it properly and will exterminate PayPal for being the irritating “insect” that it is.

2009 Jul 22 08:18 AM

[Philip Cohen]

Don't you just love those freeby listings: and just think of all the money you are making on those 99c starts when items sell for 99c (if they sell at all). Of course, these offers are simply another of John's ways of conning the stockholders into thinking that something is actually happeing: "Look revenues are down 10%, but [non-revenue producing] listing are up 100%. And Intel think you have some ability; God help 'em. Wouldn't have a clue; nor would any of the pathetic "yes" men surrounding him.

For anyone who actually buys anything on eBay, a detailed case study of shill bidding and the abuse of eBay’s proxy bidding system—all exacerbated by eBay’s introduction of “hidden bidders”—plus a detailed general criticism of eBay’s “clunky” auction platform, at
www.auctionbytes.com/f...

As a matter of interest “The Register” ran an article on this case study, at
www.theregister.co.uk/.../

The national Fairfax group (in Australia) then picked it up and also gave eBay a serve, at
www.smh.com.au/technol...

Even my local newspaper gave the story a run:
www.theleader.com.au/n...

All these newspapers invited responses from eBay’s “Trust & Safety” executives. Apart from the pathetic, disingenuous responses reported in the above articles, I am yet to receive any direct communication from eBay as to any aspect of the facts that I present, or the conclusion that I draw therefrom, that eBay may care to dispute.

But, of course, in the meantime the real question is, will we ever be able to shame this greedy, unscrupulous, disingenuous organisation (eBay, that is) into providing the auction security for buyers that it claims to provide but that it, demonstrably, does not?

2009 Jul 22 03:27 PM

[Patricia013]

Second quarter 2009 - 29 percent decrease in core sales! Nuff said!

2009 Jul 22 04:51 PM

[Philip Cohen]

Well, I can see John is sitting there, the odour of his anxiety nearly knocking out everybody in the room; but he is still in control of the ship (Captain Queeg-like), so we all have to do what he says and stay awake, anxiously awaiting Amazon's results tomorrow. I can hear the praying from over here in Australia: "Oh, please God, let not Amazon have another increase in revenues for, if so, we will again be exposed as the incompetents that we are, and the stockholders will not be happy."

2009 Jul 22 06:51 PM