RicRoe

Earnings Preview: eBay

Mr Donahoe will pump up the growth in listings citing a now useless metric as millions of listings are placed for free by his favored Diamond Sellers.

Mr Donahoe will pump up new PayPal accounts which he will claim are a result of his declaration that sellers may no longer announce they accept checks or moeny orders to complete purchases. Truth is that many new accounts can be attributed to the resurrected Micropayments accounts which require users to open second accounts in order to take advantage of a reduced fee structure.

Mr Donahoe will attribute eBay's decline to the faltering economy, and will fail to shoulder the resopnsibility for failed policies and fee increases which have severely damaged the marketplace.

Mr Donahoe will continue to assert that eBay is on the right path for a better future, ignoring the stampede of small sellers his policies and system changes chased from the core markeplace.

In other words, Donahoe will continue to run like a bull through a china shop, changing the business model from one that was the most successful into one which imitates unsuccessfully so many other Internet retail sites.

Mr Donahoe is used to being a consultant, where he simply makes recommendations, collects a check for his time and effort and walking away.

In assuming the reigns at eBay, Mr Donahoe still performs as if he was in a consulting role, imposing changes and policy revisions into a marketplace with which he has virtually no experience in as a buyer or as a seller.

It is this lack of experience that has brought eBay to the tipping point and has the company facing a steady stream of buyers and sellers bolting to other more user friendly venues.

Sellers are unable to profit from selling on eBay as the fee structure under Mr Donahoe has made it impossible for sellers to offer pricing which eBay was famous for while still allowing sellers to receive a reasonable markup on products listed.

Until Mr Donahoe faces the reality that it is his poorly implemented policy and system changes that have brought the site to its current state of poor performance, eBay can be expected to face further declines in market share over the coming year.

At this stage, buyers and sellers have voted with their feet, and moved to newer and more friendly venues that are much more buyer friendly, and which also enable sellers to offer better pricing while still being able to make a reasonable profit.

The true growth will be in a spread of new and smaller sites which are currently realizing unprecedented expansion due to Mr Donahoe's alienation of buyers and sellers from eBay.