Earnings Preview: eBay

eBay (EBAY) is expected to report Q3 earnings after market close Wednesday, October 15, with a conference call scheduled for 5:00 p.m. ET.

Guidance

Analysts are looking for a profit of 41c on revenue of $2.13B. The consensus range is 38c to 42c for EPS, and revenue of $2.1B to $2.17B, according to First Call. On October 6, eBay said it expects Q3 EPS to be higher than previous guidance of 39c to 41c, but that its Q3 revenue would be at the low end of its previous guidance of $2.1B to 2.15.

Additionally, eBay agreed to pay about $820M in cash and $125M in options for Bill Me Later, an online payments company. The acquisition of Bill Me Later, which eBay identifies as the number two online payment brand, will supplement eBay's leadership in the online payments sector, eBay believes. eBay also bought two Danish online classified ad providers for a combined $390M.  The online retailer also announced plans to reduce its global workforce by approximately 10%, affecting about 1,000 employees and several hundred temporary workers.

Analyst Views

PacCrest believes the "bill me later" platform will be a positive for EBAY as it extends the PayPal platform. The firm sees the 10% headcount reductions as necessary as there is no growth in the core business. PacCrest thinks the negative news is priced into the shares trading at $17.

Deutsche Bank likes the concept of "bill me later," but "not when there's a credit crisis," a decline in consumer spending and other issues to address and fix within eBay's core business. At the same time, American Technology Research believes things probably will not "get much worse" for the company and that its share price has taken into account all bad news.

Comments

[User 265729:]

Now I want to make clear, I have absolutely no position on eBay and I write things only as someone who has used their services...

Until eBay improves some protection for their buyers, I continue to see a downward trend for this company. Whenever you report something illegal or brazen shill bidding, you always get the same corporate B.S. reply...

"We investigated but we didn't find anything..." Or...

"We investigated and we can't tell you anything...."

I think eBay must cut-and-paste the same reply to every report of suspected illegal activity or shill bidding.

Several years ago I enjoyed eBay, but now everything you do on that site is too risky -- that is my personal experience.

In any case, I don't think that the economy is the full story on why eBay may be contracting... In fact, you'd think that they'd be really expanding as people look for quality used items...

To me, eBay is just another company who doesn't care what the consumers think and considers them disposable.

2008 Oct 14 02:34 PM

[exPowerSeller:]

The irony of the above comment and eBay's current strategy, is that eBay's current strategy trends strongly toward commodity/new-item sellers and away from one-of-a-kind/used sellers, the former or which are far more likely to be fraudulent/rip-off item sellers.

Electronics, and new "name-brand" items are by FAR the worst / most-bad-experience prone (for the buyer) items on eBay, but management is driving away so many of the other kinds of sellers, that these bad apples are becoming dominant --- which is supposedly exactly the opposite of what eBay professes to want, in terms or "improving the buyer experience."

John Donahoe has quite likely never bought or sold a single item on the marketplace he commands.... and it shows.

2008 Oct 14 03:26 PM

[squirrelygirl:]

I USED to just love eBay. I really, really loved it. Now, after the changes they have made I refuse to either buy or sell there any more. John Donohoe has ruined what was once a unique and fun place to do business and has turned it into a non-responsive monolith that holds their sellers in contempt.

2008 Oct 14 07:24 PM

[morleyadams:]

I wouldn't have ebay in my folio, if it were given to me free. Meg Whitman and John Donahoe hatched the Disruptive Innovation plan for that company long before Donahoe took the steering wheel. Their plan to destroy that company is well on it's way to being achieved. They've added so many tests, glitches and assinine policies that have been specifically created for the sole purpose of killing the site. While doing so, ebay has been performing back flips, trying to push it's company Paypal, which is nothing more than a warehouse of greed. If you are even thinking about using it's services, search "Paypal Scam" or Paypal Rip Off" first. That will give you a better idea of what you will be getting yourself into, than anything I or ebay can tell you.

This deliberate sabatage, of a once, fine lucrative company, should be investigated from top to bottom. Instead, Meg Whitman has joined McCaain's Party and John Donahoe's wife has given parties for Obama. It's about time the government blew the lid off that deceitful monopoly, rather than jumping in bed with them!

REMOVE JOHN DONAHOE!

2008 Oct 15 10:47 AM

[User 280164:]

Exactly how is there any risk with an eBay purchase when you use PayPal? A consumer would be crazy to every buy a cellphone from any retailer rather than eBay.

2008 Oct 15 04:28 PM