eBay Back in Japan

After failing once before and exiting the Japanese market in 2002, eBay (EBAY) is back for a second try, although this time around it is teaming up with Japan's leading online auction site, Yahoo! Japan, the same company whose dominant market share (currently estimated at around 50%) led to eBay's earlier retreat. "We look at the massive opportunity that Asia represents, as well as Japan, for eBay. Our first strategy is in partnering as strongest player as possible," said eBay's international president at a briefing. A Tokyo-based J.P. Morgan analyst commented that "the alliance will create a very attractive service for U.S. and Japanese users as it allows them to purchase items simultaneously in both countries." eBay and Yahoo! Japan introduced a new Japanese-language auction site, www.sekaimon.com, run by Netprice.com, which will handle translation, payment and other matters. Its shares were untraded up limit-high on the news.

Major shareholders of Yahoo! Japan include Softbank Corp. (SFTBF.PK 41% stake) and Yahoo! Inc. (YHOO 33%). eBay lost 1.7% to $32.95 on Monday. Yahoo! was off 0.8% to $26.61. Shares of Yahoo! Japan were unchanged Tuesday after gaining 7% intra-day. Softbank rose 3% intra-day but closed lower by 0.4% amidst broader weakness in the Nikkei. eBay is a 28.5% component of Internet HOLDRs (HHH), which includes a 21% holding of Yahoo!.

Sources: Bloomberg, Reuters
Additional Reading: eBay Watch: Listings Less Volatile, PayPal's Blockbuster Q4 • Analysts Like eBay; The Market Doesn't
Earnings call transcript: eBay Q3 2007, Yahoo! Q3 2007

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