eBay: Triple Whammy Weighs on Stock Price 50 comments
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I hate to interrupt the "FP30+Finding" series that I'm sure has everyone on the edge of their chairs, but there was so much negative eBay (EBAY) news Friday I need to break in and provide some highlights. As of this writing the stock is down to $23.25 and seems to have gone below the $24 support level that has been there this year.
Whammy1: Bob Swan @ Citi and GS in NY
First, Bob Swan was a keynote at this weeks Citigroup Investment Research Technology Conference [CIR] on Thursday (replay here) and he also gave a NY lunch Goldman Sachs James Mitchell preso today/Friday (audio and preso are online).
From the CIR, Mahaney published a note that was mixed at best (he summarized the note with a "neutral - uncertainty about eBay's ability to re-accelerate GMV growth remains our primary concern") and I listened to the GS conference here are the highlights:
Negatives:
- Swan highlighted a challenging 2H08 environment (he re-iterated this at the GS talk). Here's the snippet from the Mahaney note:
EBAY highlighted that macro pressures have slowed eCommerce growth most sharply in the US, followed by the U.K. and now more recently in Europe. The primary impact on eBay is lower ASPs as consumers shop for lower priced items. While the company believes it is benefiting from more value conscious shopping, lower ASPs are a headwind to GMV growth.
- Mahaney asked about the impact of an improving dollar on eBay's Q3+ results as they have benefited. Swan admitted they will have a negative impact on growth, but suggested that CBT will make up for it. This is probably correct over a longer term (6-9 months), but with the dollar shooting up against the Euro like it has, I'm not sure how CBT could react that fast?
Neutral: (or could go either way)
- There's lots of speculation of layoffs at eBay right now. At the GS conference, Swan was asked about the employees. He mentioned there are 16k and the rev/employee has gone up but they are always looking at it.
- Skype - said it is doing well but they are "still evaluating Skype's fit with eBay" - this could be foreshadowing a sale of Skype which Donahoe told FT earlier in the year is something they would do if it's not a fit.
Positives:
- Even with 2H08 headwinds (see first negative bullet), they are not changing guidance
- Key initiatives in marketplaces are showing progress - Here's a snippet from Mahaney:
- Making Progress With Key Initiatives In Marketplaces, Still Some Work To Do - eBay highlighted three key areas: 1) Broader, deeper selection of great value, 2) Improved product finding and user experience, and 3) Enhance trust and safety. While the company felt it had made significant improvements in product selection through its various pricing initiatives, and trust and safety, it recognized that it needs to do more in finding and user experience.
- Paypal continues to shine (but not get credit being in the eBay entity) - Swan iterated reasons why they wouldn't consider spinning it out which could have been seen as negative to those that think this is a possibility.
Whammy 2: Jeetil@DB drops price target (to $19!) and voices Q3 concerns
This am, Jeetil Patel @ Deutsche Bank came out with a note that lowered his already bearish view of eBay. His top concerns/reasons:
- His seller checks indicate Q3 is down as much as 15% y/y
- Fee changes appear to be a net fee increase for sellers
- US dollar strength creates a triple impact: revenues, profits and tax rate
- by Jeetil's calcs this will be a .15-.17 EPS impact in 09 and speculates it could be offset with headcount reductions.
Whammy 3: (this is just getting out there) - CTO Matt Carey is leaving!
Matt started at eBay in 2006 and I had the pleasure of sharing a beer with Matt at the ecommerce forum and he seemed really excited by the new direction and management changes. I was shocked to find out today that he has left eBay to go to Home Depot.
This FastCompany (late 07)article goes as far to call Carey Donahoe's partner in an eBay turnaround and notes that half-way through the Carey interview JD said: "we have to have this guy.". It was unusual to read about this from a Home Depot press release vs. an eBay press release as they did with the departure of Rajiv. They are inconsistent on these things and when they don't announce something major like the CTO leaving, the speculations runs rampant that they are either trying to keep it from being widely known or they weren't prepared themselves for the change (e.g. Carey let them know today or something).
It all adds up to a tough environment
I'll leave it to readers to comment and weigh in - is this just an unusually bad news day for eBay, or are things starting to really worsen more than anticipated and executives are jumping ship, layoffs are coming, etc?
Disclosure: Author is long eBay and Google
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This article has 50 comments:
Here is a site showing the IT professionals that eBay has been hiring.
www.mydanwei.com/query...
(We have no connection with this organization)
When you look at the different career opportunities, realize that this list represents new hires that are Replacing people who have left. The people leaving recently are the more experienced IT professionals.
And it's not just routine career jumping.
Here's the turnover count during the pre-Donahoe years.
2001 - 85
2002 - 72
2003 - 128
2004 - 132
2005 - 136
John Donahoe began his tenure at eBay in 2005, and is considered the architect of changes from about 2006.
Here's the turnover count during the Donahoe years.
2006 - 283
2007 - 295
When larger than normal numbers of experienced senior IT professionals start leaving an IT company, somethings up.
When senior level management starts leaving an IT company, watch out.
As a stock holder of eBay I would truly like to see this company succeed! However, every time I read something negative about this company my stomach starts to turn!
One minute eBay is doing fine and gets upgraded by some crafty analyst and the next minute eBay gets downgraded.
eBay needs to think seriously about their shareholders and do the right thing! The last three years have been dismal for eBay. Stock price down 41%. I don't know what Donahoe is doing but he sure as hell is not helping eBay or it's stock price.
Any idiot company CEO can piss away shareholders monies! It does not take a bright person to squander shareholders monies and drive a company into the ground!
ebay dropping down to $19.00 per share is unthinkable!
Donahoe needs to unload Skype! Pay his shareholders dividends, and redo all of eBay!
He needs to get his head out of his you know what! Shareholders don't want to hear a bunch of BS... they want to see profits!
Now a completely untrustworthy company. Does not DESERVE further consideration.
Must digest rest of article before further comment, but it's not looking too good!
As for the business...yeah, its the economy stupid....so LOWER the fees honestly and ALLOW your sellers to offer bargain prices like they did in the old day! Doesn't take a mental giant to know there's only so much profit in an item and ebay/paypal is sucking that profit up like its nothing - then beating the sellers into offering free shipping out of what's left.
I would recommend a try of Bonanzle.com--has the feel & simplicity for BOTH buyers & sellers of the original FeeBay BEFORE the improvements.
Well. The Guy was right on target in predicting $24 a year ago. Only catch is that his EPS and Cash flow estimate was way off ($1.4-$1.5 EPS estimate vs. $1.7-$1.8 current concensus view). So follow him if trading on price, and just laugh if value is the what you are looking for.
This is typical of allowing a company to run by mangement consultants relying on figures wthout being able to interpret them and without a clue as to how their market really works. Shareholders , kick them out and replace them by real business people if you want to see your investment do well.
The only thing that will save eBay is Donahoe's resignation immediately followed by 1) rolling back seller fees 3) restoring keyword searches 4) eliminating Paypal holds 5) dumping advertising 6) and generally restoring eBay to pre-Donahoe.
Well, lets see now..why in the world would anyone in the real world ever go to a place like ebay to shop? No one I know shops there, and I live in a huge rich, metropolitan area. We have shopping, we can go to our same stores online, so we don't need to go to ebay.
Now, lets go a little tiny step further. The folks that I know, when asked if they know what do do if they go to ebay,is that they would search for a pattern of sterling flatware, or their mother's china, and maybe a piece of linen that matches one that was made in the 1950's. Something obtuse, something "hard to find".
Ebays' search used to be able to bring folks to whatever they wanted, and what a great search it was! The best in the online auction community. Now,,,the auctions are being chased away, as are the sellers of Mom's lost china patterns. ..and what's left, is a bunch of online "stores" created by fancy software, with outlandish prices on things I could find in my nearby White Flint Shopping Mall, on sale.
Folks like yourself, who have sold a bill of goods to sellers who market products that are not uncommon, are not going to do very well on ebay. Ebay was not meant for your kind of business. The more the "old" business moves away from the site, the less customers you will have.
And the ones you will have will be young, uneducated, and unwilling to comply with the business policies in a safe way for the sellers to be risking their best merchandise.
Why are you surprised? Are you so caught up in the software world that you have no idea what kinds of business interactions are going on, or are you just trying to distract the company from the failure you are leading them into?
He will not be able to make money off of the advertising packages his company sells to the delusional ebay sellers, to sellers on this other site. He will be cut off from many of the old sellers who are on ebay now, when they leave.
And mark my words, once this other place gets rolling, ebay administration will be squealing like a stuck pig, along with all of it's parasitic advertising affiliates!
Does GoAntiques, Worthpoint, and Heritage Auctions ring a bell?
It's kind of funny, no ebay ads on those sites!LOL!
The changes are about collecting more revenue. They have nothing to do with improving the buyer experience.
First Ms Norrinton claimed they had done studies. Her quote was "Negative Feedback was the number 1 reason for buyers leaving"
The recent changes she claims now "Excessive shipping is the number 1 reason for buyers leaving"
Which one is it Ms. Norrington?
They are asking sellers to offer free shipping and capping shipping on certain categories. They have even told sellers to include those costs in their asking price if necessary. Does this save the buyer anything? However, Ebay gets to collect a final value fee on this. The only one that stands to gain is ebay.
The buyer actually loses. I offer any additional item at 50 cents additional shipping. I don't know who will buy 1 item or ten items. In order to cover my shipping costs, I would need to add full shipping for just one item on every item. I don't think this will make my customers very happy either.
I guess Ms. Norrington will next have to say the number 1 complaint for buyers leaving is "price gouging". That is how I will see it.
There are so many elderly people that do not trust putting any banking or credit card information on the internet. They will not know to ask if you will accept a money order. If you ask me, this is a strong case of discrimination against those who are taking strong measures against identity theft.
Again Paypal fees is ebay's salvation. It is currently what is keeping ebay afloat. It is practically the only entity showing growth with the corporation. That is only because they are trying to force it down the buyers and sellers throats. Sad day for those buyers that don't trust it.
It is truly sad to see what was once a strong entity sink to this level of desperation.
The Paypal only payment option is going to run off another 20-30% of the buyers.
You cannot even bid on an item if you do not have a paypal account linked to your ebay account.
Is this even legal.
Well, she's part of the problem then! Hypocrite!
The real reason for buyers leaving is FRAUD, high prices, the oversaturation of China goods on the U.S. site, and eBay's knack for lies. Now there's a profession and a site they should be concentrating on.
How much more can sellers raise their prices in order to keep feeding the greed before buyers can run down to WalMart and pick it up -without having to pay for shipping or deal with fraud? And there were always garage sales, swap meets and flea markets way before eBay.
eBay refuses to take any logical steps to combat fraud. Verify and confirm your sellers and verify and confirm OUR buyers eBay!
Sheeesh! I swear, when they were passing out the brains and common sense, eBay and their management were standing there with a thimble.
They have got their fingers in every possible orifice. They have your money spent before you do. They want you to sell quantity to make a pitiful profit, be as naked as Adam when it come to buyer fraud and scammers, and they offer 0 support to it's customers.
The take it or leave it attitude and overwhelming greed has destroyed a once fun and easy place to buy, sell and trade.
I have absolutely no sympathy for you eBay. In fact, I've only wanted fleas and mosquitoes to perish more than you, and even that's a thin line.
Enjoy your slow death eBay, as many of us are watching on the sidelines with much anticipation awaiting your final keel.
And I'll add, I think they're scuttling ebay on purpose. It's that - or - they really are this stupid.
And I'll add my theory - they are scuttling the site on purpose - it's that - or - they really are this stupid.
Jeetil, you are a hero, and a genius. Too bad the CEO's of ebay didn't believe you. Then maybe Mr Wingo here wouldn't be crying about his ebay advertising contract being at risk...he would have never had it in the first place, and ebay, being dumb enough to support Channel Advisor even more. What part of 'financial loss' do we not understand?
Ok now folks, get it line, GoAntiques is waiting for you. Your listings will be just fine, and safe there, from predators and buyers who extort for money and free goods, and from paypal keeping your money without any good reason. You won't experience the humiliation of feedback at all, and the quality of the sellers and buyers there will be much higher than those of ebay. You will have a committed host partner to list with, and the best customer service you ever had, that's actually Alive!Enjoy your new home! Ebay only has room for Nordstroms and Macy's now!
On Sep 07 11:49 AM randy703@aol .com wrote:
> I hate ebay more every day.
> The Paypal only payment option is going to run off another 20-30%
> of the buyers.
> You cannot even bid on an item if you do not have a paypal account
> linked to your ebay account.
> Is this even legal.
However, all that said, I would still like for eBay to succeed! Who knows what will happen with this stock in two to three years?
If enough people complain maybe eBay will once again be a great place to buy and sell.
In the meantime, may a million fleas infest the armpits of Donahoe, all eBay board members, and Meg Whitman who jumped from her burning ship with Billions of dollars.
As in Changing the User Agreement time to time? Seller's are going to get dizzy, the worst thing was the changes were adverse on them.
www.youtube.com/watch?...
I doubt very much that any business course at Harvard has ever made mention of a little tidbit that I'd like to share with ebay and any financial analyst reading this.
"Dance with The One, what brung you."
The love affair with commodity retail is a relationship with a fickle gal. She'll hitch her wagon to whichever groom can give her the most 'bang fer the bucks'. That would be Amazon. They actually buy and sell some of their own Bangs; something you'll never understand, ebay.
The collectible sellers really loved ya, ebay, but ya broke their hearts. Now we are dancing with other partners, and even with ourselves. We may come for a visit, every-so-often, but ... well, you know how this story goes.
The band just announced this is the last dance. We glance your way, see you twirling around with your new partners (but you look a bit confused) and offer you a weak smile across the dancefloor. We wish you the best, really.
Last comment, forever.
We sellers read story after story of disabled persons, stay-at-home moms, retired persons, etc., who relied on eBay to make ends meet.
eBay simply kicked them to the curb. No thank yous, no fond farewells, no "Sorry, we have to put you out of business," nows. Just a smack in the nose and a kick to the curb.
Rumor has it only one-tenth of one percent of sellers ever abused feedback.
eBay destroyed it's own legacy. There is nothing on this planet like eBay feedback (in its former state.) Actually, John Donahoe destroyed eBay's legacy.
The only way to get it back is to kick him to the curb. Don't forget to insult him on the way out.
good bye ebay!!!!
Rickabaugh
Along with ALL the one-time-wonder-poster... that troll these boards!
Anyway, the folks there are so kind and wonderfully helpful to you, as a seller, that you will just be overwhelmed by the amount of customer support offered to you! The fees will be less in comparison to what you were paying monthly on ebay, if you sold in the moderately priced collectibles range.
Most of the sellers who are naysayers to GoAntiques are ebay paid providers who cannot make any income if the sellers leave. Their income is from selling to sellers who have expensive storefronts for thousands of dollars. If the average sellers leave, the buyer audience will leave too, and that leaves all those certified providers out in the cold, as well as their sponsored sellers, who, by the way, get better placement for using their services. It won't matter anymore, though.
This is the perfect opportunity for an experienced site (many years older than ebay) to get ready to receive all the fleeing sellers. Thank goodness they have fair and equal policies for all! That will be the best selling point they have in attracting the highest quality customers. The listings there are still fixed price, and very simple. But another seller there, and at Tias', told me last week, that she fetches much better prices on her goods there, than on ebay.
People who market advertising packages will not be able to prey on the site like they do on ebay, costing ebay way too much in profits and offering really nothing tangible.
I count myself as among these, and the about-face took less than a year to accomplish, after ten years of loving ebay.
I can't really add much to what everyone else has said. The ONE thing that hasn't been stressed enough, though, is that most of ebay's member sellers were also ebay's most faithful buyers. The sellers that leave in disgust ceertainly won't be back to buy! I, personally, would rather make a two hour round-trip to the closest mall than even look on ebay. Just did it this week, and am going again this weekend. In the past the majority of those purchases would have come from ebay sellers. Never again.
Next they authorized 6 billion dollars to repurchase their own stock and in the past 2 years spent 5 billion for buyback. The stock value is in the toilet inspite of the share buybacks.
If they invested 1/10th of that into improving their core business, creating a real customer service, seriously tackle counterfeits and Chinese and Eastern European scammers - instead they just raise fees manipulating shareholders and alienating sellers trying to become Amazon, which they cannot since on Amazon, sale is a sale when item is paid for. On eBay sale is considered sale before payment took place.
Too many issues ... no real understanding of those by the McBain MBA types who run the company now - thankfully the media is now listening to sellers so those uncomfortable eBay truths are no longer overpowered by the usual eBay censorship and PR.
1) Lead not follow. Once you are a leader stay a leader. Ebay was a leader. Two-way feedback. Auto Sales. Online Auction Market-Share.
Even in the Olympics, how many athletes lost or almost lost when they looked in the rear-view mirror? Now they are trying to emulate their competition...becoming another of THE SAME...instead of touting their DIFFERENCES and improving on them. Who needs ANOTHER AMAZON???
2) You can try to MAKE people do things or MAKE PEOPLE WANT to do things. Ebay is trying to MAKE buyers come to the site and buy by artificially muzzling sellers [no buyer feedback] and best match [NOT!].
If you go to a flea market and you have Target and Gap only, how many buyers will go? If you go to a flea market and have 1500 sellers with RARE/UNIQUE/ HARD TO FIND/HAND MADE or other choice items YOU CAN'T GET ANYWHERE ELSE how many buyers will WANT TO COME! That's what Ebay doesn't get.
3) Buyers have no vested interested in Ebay. They come and go. Sellers DO have a vested interest. They have an INVESTMENT in their business on Ebay. Not as easy to go. So why demean, throttle, kick in the pants and drive away the very sellers who pay Ebay's bills? Buyers don't pay Ebay/Paypal fees...sellers do. And sellers are ALSO BUYERS. So you make things difficult for sellers, they won't buy either.
4) Ebay is trying to become Amazon. There is already an Amazon. We don't need another one. You don't wake up one morning and shut the door in the face of your long-time customers/partners, turn the platform upside down with inane rules and regs and non-sensical changes and become something totally different than your business model and expect to succeed. If Wal-Mart decided tonight to become a designer store a la Bllomingdales or Neiman's at the expense of their core business would they succeed? NO!.. Because they will have alienated their core customers [low income value seekers] and they will not have acquired a rep for their new goal customers [hoity-toits]. Failure waiting to happen. That's what Ebay is doing and why their stock is at ANOTHER 52 week low as of today. Ebay should take they best of who they are and morph a PART of their business model to emulate the BEST of their competition.
5) Any organization that doesn't a) offer MEANINGFUL customer service and b) LISTEN to their core customers [Mom + Pop sellers] is destined to fail.
$10 a share is on its way. And that may be too high.
I'm glad you do well. I hope that non of the disgruntled target you with misplaced revenge. If this occurs, will Ebay back you up? Will paypal?
Do you have these guarentees in writing?
Don't you know that in ebayland neutral equals a negative.
Ebay is so arrogant that they think they can read minds and change the meaning of words.
Please update your Seeking Alpha article to reflect this.
Thank you,
Perhaps my prediction of $10/share by 4QTR was too generous because today eBay closed at $22.70. After hours trading raised it up to $22.76 but that's hardly worth mentioning.
I am very happey to announce that My best ebay friend & I closed our ebay stores last night. It felt Sooooo good too. Paying for NOTHING monthly. We lost thousands in the last 2+ years. Thinking ebay would have a come-back. NO WAY NOW. I think they will go into 1 digit stock prices. Donahoe has made so many screw ups, it didn't make any sense.
We concluded that Donahoe's either a complete idiot OR intentionally chasing away sellers to change the concept of ebay. They may want to make it their own retail web store.
Yes, ebay was a fun site until about 3 years ago. That's when they started becoming Gestapos & manipulating searches & playing games. I went from a Power Seller to almost No sales quickly. At first, I blamed the economy, but it wasn't that. It didn't help sales, but the biggest problem was ebay itself.
I think this was a very reckless path that Ebay took - I know they've been gearing up for this change to retail probably since 2004...but they never thought that by losing sellers they also lost buyers too. Sellers buy as well as sell on ebay and now that they are leaving, their customers are following them! I'm sure they wanted to keep us and milk us for fees until they were ready to kick us out and go retail completely - I'm glad to see it backfiring. I'll miss the old Ebay - for 10 long years I thought it was a friend. Business is business and I just can't make sales on that site anymore!
auctions8.com is owned and managed by determined & hard working group of members to become a permanent and safe home for all.
Site is for genuine sellers only
DO NOT PAY ANY FEES. EVER AGAIN!
One great Ebay sellers is worth more than a million Donahoes. This "man" is truly clueless and worthless. If he isn't shown to the unemployment site soon, the site will not survive. It's as simple as that. To say this stock should be sold ASAP is the understatement of the yar.