eBay Strategies

eBay's Q3 and what it means for sellers - I of II

Yesterday, I put together some first impressions of the results, and today I was able to scan most of the analyst reports and of course listened to the conference call. 

Today, I wanted to highlight some of the macro financial aspects of the call and then go through what eBay's Q3 results and Q4 outlook mean for sellers as that's what this blog is all about.

Summary of analyst thoughts

In general, the Q3 results were a non-event because they were largely known. Thus the big event was eBay's significant lowering of their Q4 outlook which caused analysts to also drastically cut their 09 views as well.  Most analysts I follow took down their 09 revenue significantly $800-$1b and gave EPS a big haircut.  The Q4 outlook represents flat Q/Q and essentially down y/y which has everyone freaked out.  eBay showed some scary looking charts that show a continued deceleration (ecommerce and eBay metrics) going into Q4 here: (click to zoom in)

First the upper right graph is the comscore ecommerce data (eBay doesn't say if it's ex-travel or not, I assume it is - conveniently there are no labels).  Comscore's August number was 6% - down from 10% in July.  I've marked that 6% - remember that number, it will come back up in the metrics of interest section.  Next, I drew a red line around early August in the eBay data that shows how things really started to decline for eBay.  Interestingly, at ChannelAdvisor we didn't see that slowdown, but did see it right around 9/15 when FP30 was released.  That bottom right chart has Wall St. freaked out right now because it is down and to the right, meaning the Q got worse so Q4 will start out at that very low data point.

Here's a brief summary of Analyst reactions:

• Brian Pitz@BofA - kept a buy on eBay and speculates that the eBay problems are macro and not eBay specific (he lowered Amzn, GSIC and goog revenues to reflect eBay trend)
• Justin Post@ML - speculates that eBay's problems are Amazon's gains: "

  also losing share Given magnitude of eBay's 3Q GMV miss ($14.3bn vs $14.9bn expected) and weaker 4Q guidance, results have a negative read-across for AMZN and GOOG.  However, eBay sellers as well as private and public eCommerce companies have indicated more deterioration on eBay than other channels and off-eBay PayPal volumes beat our estimate by $260mn.  We are incrementally more cautious on sector, but believe some of eBay's 3Q $640mn GMV miss likely moved to AMZN. 

• Scott Devitt@Stifel - heroically kept a buy on eBay, and focused in on the value of the future cash flows which make the stock appear cheap from that perspective.  He seems to recommend eBay acquire gmarket.
• Christa Quarles (who is no longer sober - ha!) tied with James Mitchell for the funniest title: "eBay: Lump of coal for the Holidays."  
• Imran@JPMorgan who has been bullish and is all about listings finally broke his bullishness: "eBay: Fall of a Franchise" and downgraded to Nuetral.  Imran believes margins are going to fall considerably and thus anemic operating income will result.  Imran focuses in on the various MP metrics and believes that eBay's user experience is not improved and if anything worsened.
• Meeker/Joseph@MS have an interesting 'sum of the parts' analysis summarized here: "Our sum-of-the-parts analysis values eBay at $26 per share. If we peg the valuation of PayPal at $7.13 per share, Skype at $2.09, Marketing Services at $4.08, and cash at $2.77, eBay share’s current price of $15 would imply the market is not assigning any value to eBay’s core marketplace"
• Ben@UBS points out that this is eBay's first negative growth GMV Q and like Justin@ML highlights increasing competition from AMZN.  He's also concerned with some of the slow-down at Paypal.
• Colin@Lazard focused on the macro economic 'rockiness' and took down not only eBay, but Amazon, GSIC and DRIV
• James Mitchell@GS tied Christa when noted that eBay sees: "No Christmas".  James believes that the companies problems are largely self-inflicted and while not helped by the macro, certainly the macro is increasingly exposing them.
• Jeetil@DB who was bearish, is vindicated by Q3 and lowered his PT to a paltry $13 from $16.  Jeetil feels eBay should sell Skype and use this opp to invest in the eBay core (I concur on this one - let's put 1000 devs on finding - NOW).
• Mark@Citi cites managements execution as one of the major problems at eBay and worries that the model is just fundamentally broken: "Execution -- fee/rule marketplace changes have been highly disruptive & arguably poorly implemented; & 3) Structural - Decreasingly desirable Auction format & an infrastructure-less business model arguably ill-equipped to match rising consumer requirements."
• Derek Brown@Cantor actually took this opportunity to leave grizzly territory for plain ole bear and has moved eBay to a hold from a 'sell'.   He notes this is the first time ever that eBay has had to essentially lower guidance and thinks it's a big step towards recovery.  Derek lowered 09 revs by a substantial 1.3b (biggest I saw).
• Marianne@SIG - Likes the stock here as a value play noting that it is at 9x revised EPS. She speculates that eBay could start a dividend (5%) so you should play the stock that way.
• Jim@cowen - Kept a neutral on the stock.
  

   

Jeetil had a really good graph I wanted to show everyone as it's relative to the seller impact of the Q:

 

This graph hones in what eBay has been calling a more important metric than GMV - transaction volumes.  What Jeetil notes is that Q3 started a material y/y deceleration that he believes will go negative in Q4 based on backing into the number from the lowered guidance.  Of course if transactions go down 7% y/y AND they are lower ASP, then GMV will get amplified down y/y substantially.

What's Macro and what's Execution/eBay?

The really big question coming out of the eBay call and subsequent analysts notes which we'll have some insight from the Goog+Amzn results is: "Is this slowdown specific or worse on eBay, or being felt everywhere in ecommerce/inet?".  I have some data to throw in the pot later on this point.

That's part I, part II coming later with an analysis for sellers and some Q4 action items.  I also owe some FP30 insights we've learned and I'll do that this weekend as well.

Seekingalpha - I am (painfully) long eBay and (thankfully) long Google.

eBay's Q3 results first impressions...

When eBay pre-announced that they would come in at the low end of their Q3 revenue guidance and on the high end of EPS, most Wall St. folks started to think more about Q4/09.

Personally, I was impressed with this performance given some of the GMV slowness we saw on eBay and was wondering where the revenue+profits would come from to hit those numbers.  Today eBay announced Q3 results here and the answer is what I had guessed (hint - it isn't GMV).

In the marketplace business, revenue was up 4% y/y.  GMV was down 1% y/y and here's the catch - advertising was up a whopping 127% y/y.

I don't know what the FX-adjusted GMV was, but won't be surprised if it's ex-fx down 4-6% y/y globally and I'd bet 10% in the USA.

The bulk of this comes from the increased monetization of eBay pageviews with banner ads, skyscrapers, home page placements, and the increase of paid links on the site.

I want to do a lengthy post on this after the Q3 dust settles as I (and many sellers) scratch our heads on why eBay is taking such a short-term view of these ads and really sacrificing GMV (and placement that sellers have paid for) vs. removing the buyer-distracting ads and

The way we're going, I'm very concerned eBay will become an advertising site with some GMV on the side and that's definitely NOT the way to fix this marketplace.

Q4 looks very light
The street has Q4 at $2.3bn/.43 and eBay's press release has guidance of $2.02-2.17 and .39-.41.  The stock is getting hammered down to $15 and lower in AH trading, but we'll have to wait and see what analysts think and also if eBay gives any view into 2009.

More to come
I'll have some more thoughts after the conference call. Here's a tip - you can see the presentation already here.

SeekingAlpha Disclosure: I am long google and eBay

For all you Wall St. Readers...

I know there's lots going on in the world of Wall St. as everyone watches to see if the $700b package goes through or not, but for those of you that can peel away from that for an hour, we're hosting a 'state of ecommerce' call with Citi's Mark Mahaney this morning at 11am.

Here's the blurb from the notice Citi sent out:

• Please join us for a discussion with ChannelAdvisor CEO Scot Wingo and a few top multi-channel clients, on Q3 e-commerce and online marketing trends. ChannelAdvisor is a leading e-commerce provider, managing over $2B/year in Gross Merchandise Volume (GMV) on behalf of its clients via multiple channels, including online marketplaces (eBay, Amazon, Overstock), shopping comparison sites (Shopping.com, Shopzilla, Nextag) and through search engines (Google, Yahoo, MSN). 
• Our discussion will focus on four key topics: 1) Trends in eCommerce particularly through Amazon and eBay marketplaces; 2) Feedback from recent pricing and format changes at eBay; 3) Expectations for Q4 holiday season; and 4) An update on online Search advertising trends. 

I'm looking forward to this as we have three top sellers from the consumer electronics, apparel and jewelry categories that will be sharing what they are seeing around the eBay changes, sharing their Amazon experiences and we'll also be sharing some trends we're seeing in search, cse, and marketplaces at ChannelAdvisor overall.

If you're on Wall St. and didn't get the invite, shoot me a note (scot at channeladvisor dot com) and I'll get you the invite.  

Triple whammy eBay news day weighs on the stock...

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 news today 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?

SeekingAlpha disclosure: I am long eBay and Google

Amazon crushes! Classic Beat and Raise Q.

I'm still digesting, but Amazon looks to have had a killer 2Q.  Revenues came in at $4.06b vs. $3.995b and the bottom line was .37 vs. .26 on EPS.

Amazon bucked any ecommerce slowdown with 41% y/y growth in sales, that's 35% ex-FX.

Amazon took up their 2H08 estimates and FY08 estimates. The stock is up 5-10% in AH trading.

More details on 3P as we get them.

eBay Bears on parade - a review of analyst comments on eBay's Q2 results.

Rough day for eBay

As predicted after we heard about eBay's slowing of GMV growth, Wall St. has decided that eBay's turn around isn't going fast enough.  The stock is down 13-15% today trading towards $24, a level that the stock has flirted with, but hasn't trade around since 2003.

The primary area of concern is GMV growth. Ex-FX, GMV grew at 4% y/y - Both US and Intl were 4% which represents a material deceleration from Q1.  Ignoring all the positives of the Q, this one datapoint has sent the eBay bears on parade in a major way.

Some Bulls turn into Bears
A number of analystscame out today lowering their ratings and/or price targers:

• Goldman Sachs (James Mitchell)- For the first time in 10yrs that I've followed eBay, GS downgraded eBay from 'Attractive' to 'Neutral'.  James sums up the action: "The lesson from 2Q2008 GMV is eBay’s business is too large and complex to rapidly reinvigorate, especially in a challenging macro climate, causing consumers to trade down."  Goldman calcs a $30 value for eBay.
• Merrill Lynch (Justin Post) - Down to Neutral.  Justin was looking for more acceleration and it didn't pan out.  He also sees a $30 value.
• TWP (Christa Quarles) - Christa has an interesting view.  She says: "Essentially eBay has a “demo problem” in the type of buyer it attracts and shedding the “flea market” image is going to take more time than we originally anticipated."

Existing Bears get Grizzly

The market is focused on GS/ML/TWP changing their ratings off of 'buy', but one group that's always interesting to check in with is the existing bears.  In fact, you could argue that these guys got the call right and if their clients listened, avoided today's bloodbath in the stock. 

• Deutsche Bank (Jeetil Patel) - Jeetil has had a sell on eBay for as long as I can remember and has cited traffic trends, GMV growth, marketing costs and active user deterioration as reasons that the eBay model is broken.  Jeetil also closely follows Amazon's 3P business and reports that eBay's pain is Amazon's gain.  If ecommerce is growing at 15-20% and eBay's growing at 4%, where is that 11-16% going - Amazon? In today's note, JP re-iterates his sell and notes: "We think eBay faces structural issues that may lead to significant operating margin contraction, if the company needs to spend in ads/demand growth, lower seller fees and re-invest in R&D (interface). Note the strategy of increasing sellers fees and couponing has not improved underlying metrics, while recent initiatives may not be enough to carry the business in '08."  Jeetil put a $22 value on the stock - which is a street low.

• Cantor Fitzgerald (Derek Brown) - Derek has had a sell on eBay since initating coverage and re-itereated today, but at a $24 target.  His comments were interesting as they specifically highlight the possibility of increased competition (amazon paypal competitor): "In our view, key operating metrics continue to reveal that the company's core franchise is losing mindshare and marketshare at a rapid pace and that a much-hyped turnaround in it is still very much a work-in-progress. Moreover, we continue to believe that uncertainty and competition may increase for the company in 2H:08, with the prospect of further transitions in its business model, as well as the possibility of a PayPal-esque product introduction from Amazon.com."

Last of the Bulls have interesting take on the Q
An interesting group are those analysts that used yesterday's news to actually get MORE bullish in the face of all the negative sentiment. Long time readers will know that I'm a Scott Devitt fan and here he is with Shawn Milne (the e is silent) swimming upstream:

• Stifel Nicholas (Scott Devitt) - In a sea of bad news, SD found a surprising amount of items to be positive+excited about:
  • SD anchors his view on GMV growth.  In his view GMV growth ex-motors (key differentiator from others) was up 11-12% y/y.
  • Active users (ex-china) grew 6%
  • Marketing services revenue was up 38% and is now 11% of revs.
  • Paypal revenue accelerated (33%) due to off-eBay growth (57%)
  • Believes 80% probability that changes are working.
  • Scott concludes by putting a $33 bogie on the stock (which is $10 up from where we are right now).
• OPCO (Shawn Milne) - Shawn bravely has a $35 target on eBay (i'm guessing he must be street high?)  His arguments:
  • Similar to Devitt, he believes if you peel the onion on GMV growth, it actually increased in 3 largest markets.
  • Loves Paypal
  • Believes guidance is way-conservative and easily beatable
  • Loves valuation here

Analysts that are on the fence

Last, but not least there are many analysts that didn't take any action based on Q2, but had some interesting points that warrant highlighting:

• Citigroup (Mark Mahaney) - M+M (as I call him, not to be confused with Eminem) has a hold on eBay and kept it, but the language in his note was best described as 'grumpy'.  First, Mark referred to eBay's auction business as the 'Anchor around eBay's Growth'.  M+M views the GMV growth as very negative, but the overall results as a beat.  Thus he reiterates the hold, but says they are incrementally more negative.
• BofA (Brian Pitz) - Brian has a buy on the stock and lists out the Q results, many positive, many negative and essentially ends up with a wait and see.  Brian's price target is $38 (ok he must be street high - I'd be shocked if he doesn't bring this down with the stock around $24)
• Cowen (Jim Friedland) - Jim stays neutral and is really concerned with competitors: Amazon and GPS.
• UBS (Ben Schacter) - Very concerned over GMV Growth.  Kept neutral, reduced PT to $30
• Morgan Stanley (Mary Meeker) - Kept 'overview-v', put a $35 target on it.
• JP Morgan (Imran Kahn) - Imran keeps his overweight on eBay.  He views the marketplace biz results as mixed and PayPal/Skype as positive.  He's particularly positive on margins.
• Susquehanna (Marianne Wolk) - Marianne keeps her 'Positive' rating on the stock and is surprised that the results actually weren't worse: "Given the weak economy (which is driving demand for lower priced merchandise), eBay’s discounting and couponing and the shift to classifieds in the vehicle sector, it’s a wonder the business held up as well as it did."  She has a 'sum of the parts' analysis that suggests a $37/share value for the eBay portfolio. She suggests Skype is worth $2.6b which I'm not sure I buy. 

Conclusion
With the exception of Devitt and Milne, overwhelmingly the analysts are concerned about the GMV growth rates for the marketplace business.  That datapoint completely wipes out all of the other positives from the quarter. 

Seeking Alpha Disclosure: Long google and eBay (post coming on this shortly)

eBay's Q2 results - first thoughts.

Exec Summary

While eBay beat the street on the Macro side (revs/EPS) and PayPal kept on chugging, the marketplace saw some deteriorating metrics that are going to be perceived as negative.

Guidance for Q3 is lighter than Wall St. was thinking so the speculation of a beat and raise Q didn't pan out.

eBay Macro financials

• Revenue - BEAT! - eBay came in at $2.2b vs.the street (consensus) of $2.17b.
• EPS - BEAT! EPS came in at: $.43 vs. the street at $.41.

eBay marketplace health metrics

• Revenue growth - NEG Q2 eBay core revenue grew at 13% y/y (feels like a slowdown as was in the 20's historically, i'll have to double check this.)
• GMV growth - MISS Q2 GMV grew at 8% vs. Q1's 12%. It will take a while for IR to let Wall St. know about the FX contribution here, but my guess is it is 4%-ish so the growth rate of GMV ex-FX would be 4%.  Historically the US is 4-6% slower than international so we could have seen negative US GMV growth for the first time ever in Q2.  This will be a big area of concern on the call.
• Active users - Active users came in at 84.5m, up .6 from Q1 - so it's hanging in there, but not really accelerating like Wall St. would like to see.
• Listings -666.9m listings, 19% y/y growth (if listings were up 19% and GMV was up 4% ex-FX, then conversions went down 15% effectively, assuming ASP was constant).
• Interesting - Fixed price is now 43% of transactions

PayPal metrics

• PayPal Revenue - PLUS In Q2, PayPal revenue grew at 33%
• Transaction Processing Volume (TPV) - PLUS In Q2, TPV grew at 35% vs. Q1's 34% y/y so a little acceleration there.

Optics/body language

• Stock repurchase - eBay reported that it purchased 19m shares for $566m (slightly more than anticipated).

What to listen for on the call:

Link to call and presentation here.

Most importantly for the conference call is that intangible 'body language'.  Wall St's radar is particularly raised about these topics:

• Macroeconomics - You'd have to live under a rock to not have heard about the financial crisis, record oil/gas, consumer confidence at a 30yr low, etc.  Wall St. is very concerned this will impact ecommerce and online advertising.  Some Wall St'ers are perplexed why there hasn't been a material 'falling off a cliff'.  I have some theories here we can get into in a future post. If eBay says something like 'consumer softness', you can expect some downside in the stock tomorrow.
• eBay Core - How's demand?  Why are pageviews down? Finding 2.0 update? Coupons working?  Microsoft rebate program working? How's BestMatch?  Any changes coming to the fee structure?  Any more diamond-tier sellers coming? Can/will that be material 2H08?  The car companies are all doing poorly, is this material in eBay Motors? Why is GMV growth slowing?!?

Seeking Alpha disclosure: I'm Long Google (who reports Thurs!)

Goldman live blogging II

Q: In the Q1 call you talked about things slowing, give us an update
A: (swan) recapped what they said in Q1.  Then mentioned that CBT is a big area of growth that has offset domestic softness.

Q: Did they play a stronger role than in other Q's?
A: Yes, we were up 2% on CBT, expansion of PayPal playing a role.

Q: In terms of rising fuel cost have sellers complained about shipping costs?
A: Not really.  Rising fuel has more cost on demand, some shipping carriers, but that impacts all of e-commerce.  What we do see with eBay sellers is we are putting a much higher focus on their performance via DSRs - 2 of which are focused on shipping. Since we made this change there's no doubt the entrepreneurial nature of eBay sellers has kicked in and they are making a huge improvement across the site.

(questions from the audience)
Q: When you look at some of the formats other than eBay does that dillute or cannabilize core eBay?
A: We don't care - we connect buyers and sellers.  If that's a classified, we have Kijiji, that's great, if core eBay, great, if ad, great, etc.  What we're seeing is buyers try everything.  They'll go to eBay, check out a cell phone, then they go to shopping.com, maybe click on a text ad and then come back to eBay - with more confidence knowing they checked out the entire web.

Q: It's been a few years since the roll out of third party listers like isoldit (drop off stores) - what's the growth rate of third party listers vs. individuals.
A: I don't know. There are drop shops and there are trading assistants.  We don't break that out.  Consumers selling on eBay continues to be strong - eBay is the only place you can turn assets to cash in 14 days.

Q: assuming you get to a stage where you have a great search engine, what's the rational for having insertion fees at all?
A: Insertion fees have created quality at eBay - it motivates sellers to price well and put things on eBay they want to sell.  This gives eBay a fresh set of inventory every 7 days and that makes eBay unique.

We took a step recently to increase the FVF vs. listing fees, we'll do more - you'll see category pricing like media/technology.  Then if you look at Italy, insertion fees are quite low, very close to zero.

Auctions is still an important and unique part of eBay and insertion fees are a quality governor.

Q: What does fixed-price do to conversion ratios?
A: Good question and we talk about it internally.  We will continue a strong focus on high conversion inventory.  As we allow more and more larger sellers to bring more inventory on, then conversion rates will come down.  We're seeing that now, listings up, conversions down (but holding up better than we thought it would). We will monitor in an intelligent way.

Q: Do you discuss amazon as a competitor? Why are they doing so well.
A: E-commerce is only 5-7% of offline retail and we both see lots of room for growth. Let me comment less on Amazon and more on eBay.  Our competitive differentiation/focus in value and selection.  We're the place you find the lowest prices and largest selection and that's our buyer base.  We tend to be the value oriented shoppers and collectors which account for roughly half of the ecommerce buyer market.

Over the next year as we improve the buying experience, our value proposition will increase.

With sellers, there's nowhere else to get this volume.  What we haven't been great at is as sellers scale, scaling with them.  Lots of examples of small sellers not scaling with large sellers.  We are going to fix that.  Amble growth available for both us and Amazon.

Q: Can you talk about Stubhub?
A: Stubhub is a fabulous business.  A secondary ticket market.  No way better in the world to know you want to go somewhere and get it reliably and conveniently.  Of all the eBay portfolio co's, Stubhub has the best buyer experience.  Doing deal with Madonna and sports teams.

Q: You have no leverage on the balance sheet - any plans?
A: (Swan) Our philosophy has been to continue to do M+A as part of our growth story, acquisitions we did in last 3-4yrs is 40% of our revenue today.  We want flexibility to acquire our own shares when not valued correctly.  Few months ago we had $4b in cash on the balance sheet but it was all offshore.  We put a line of credit in place to give us flexibility without moving cash.

In last months we have bought $4.2b of stock - almost 10%.  If we take on debt it will be part of a consistent approach to do M+A and  buy stock.

Wall St. Call today... @11am EST

Christa Quarles@TWP is hosting a call that's probably of most interest to the Wall St. folks that read the blog, but I'm sure some sellers may like to hear it as well.  We'll be talking about the eBay changes announced earlier this week and I've invited two sellers to participate as well.  One seller is from the media category and the other is more of a fixed-price type seller so we should have two good points on the fees/feedback and seller protection changes.

Details follow (sorry if the formatting doesn't come across very well)

TWP – ChannelAdvisor Conference Call

Hosted by TWP Media and Telecom Analyst Christa Quarles

 

Details:

· DATE:   Friday, February 1

· TIME:   11:00 AM ET / 8:00 AM PT

Conference Call Details:
 Dial In:     877-874-1588

Toll:      719-325-4839             
Passcode:   5160486  

Replay Details:

 Dial In:             888-203-1112

           Toll:                 719-457-0820

 Passcode:        5160486

 

 

Focus of the Call:

We are hosting a call with Scot Wingo the CEO of ChannelAdvisor and some of his merchants to discuss the reaction to the eBay pricing changes that were announced on Tuesday, January 29. 

Questions that we hope to have answered from a merchant perspective:

* Will you increase your eBay budget now that insertion fees have decreased?

* What percent of your budget did Amazon get in 2007 and do you expect that to increase in 2008 even with the fee changes at eBay?

* Given eBay's fee changes will really center on conversion rates, how have they improved (or not) in the past year?

* Do you feel the Best Match search is working sufficiently well to ensure listing spam gets filtered out?

* Would category based pricing be a good or bad thing for you?

* Do you think the management changes will be a good thing for eBay? What are the biggest changes you expect to see within the next 3-6 months?

* If you were given the CEO role at eBay, what top three changes would you make?

 

About ChannelAdvisor 
ChannelAdvisor Corporation provides technology and services that enable leading online retailers to maximize their products across multiple e-commerce marketplaces such as eBay, Amazon.com and Overstock.com, comparison shopping engines such as Shopping.com, Shopzilla, Nextag and Google Product Search and search engines such as Google, Yahoo! and MSN. In 2006, ChannelAdvisor managed over $1.6 billion in gross merchandise value (GMV) on behalf of its customers. ChannelAdvisor solutions combine best practices, on-demand software and integration technology to help retailers sell more products, faster, by automating labor-intensive, manual functions so they spend less time optimizing campaigns and more time solving marketing and business issues. ChannelAdvisor's customers include GSI Commerce, Sears, Brookstone, Abebooks and Motorola. ChannelAdvisor Corporation is headquartered in Research Triangle Park, NC with offices in Atlanta, Seattle, the United Kingdom, Australia and Germany. For more information, visit http://www.channeladvisor.com/.

Related Companies: Companies that we provide research coverage on that could be discussed include eBay( EBAY), Google (GOOG) and Yahoo! (YHOO).

About the Analyst:

Christa Quarles follows Internet Services at Thomas Weisel Partners. Previously, she was a summer Equity Research Analyst at Morgan Stanley Institutional Investment Management, where she covered the Media & Entertainment industry. Prior to that, she was an Assistant Vice President at Merrill Lynch & Co., where she worked in the Fixed-Income Research Department. Christa received a Bachelor of Science degree from Carnegie Mellon University, where she was named Phi Beta Kappa, and a Master of Business Administration degree from Harvard Business School.

eBay Q4 news - part III - Highlights of the eBay conference call

The transcript will be available online shortly, but I wanted to capture some highlights from a seller's perspective.  Here they are:

• PayPal is majorly kicking butt
• Meg bullish on new management team
• eBay marketplace:
  • GMV grew 12% y/y (not clear how much due to FX)

Donahoe on the future:

• Huge marketplace business, not growing as rapidly as would like
• PayPal is a great business - accelerating momentum, unlimited apps
• Skype - 276m users in <4yrs with $282m in revenue
• With these three businesses, they have a leg up on the future
• First: going to get aggressive about eBay getting easier and safer
  • Made strides, need to do much more, taken hard look at experience and going to make breaks from the past to deliver the best buyer experience.
  • Feedback, user protection, customer support, pricing in next week (implies ecommerce forum)
• Second: Fixed price will be a focus (already 40%+, growing faster than auctions+ecommerce)
  
  • Auctions are fun
  • But for many, auctions are not optimal
  • What eBay needs to do is marry the fun of auctions with convenience of fixed-price, only eBay can do this - thus competitive advantage
  • 08 budget has wiggle room to do these things
• Third: Paypal!
  • Going to make ebay integration better
  • Off-ebay stuff too

Fee/pricing changes

eBay has a slide in the deck (slide 10) that talks about the tests they did:

1. free gallery (yeah!!! FREE FREE SET GALLERY FREE -Sting)
2. reduced insertion fees
3. reduced fvf

The conclusion is that free gallery and reduced insertion fees were positives and reduced fvf didn't have much impact (we could have saved some testing time and effort here).

"2008 Price Restructure" coming next week at ecommerce forum (shaping up to be a big deal this year)

Swan covered this and telegraphed that  eBay will reduce up-front listing fees and increasing FVF fees.