Ebay Troubles Getting Worse

[smile]

Q. The stock of eBay has really gone into the tank. What is the outlook?

A. A slowing economy is taking a heavy toll, especially as eBay tries to reinvent itself because its online auction platform is slipping in popularity.

Its PayPal online payment service and Skype Internet-calling business have become driving forces.


Trying to branch out of the auction marketplace, eBay recently received Federal Trade Commission approval to buy the U.S.-based online payments business Bill Me Later. It also is purchasing Danish online classifieds provider Den Bla Avis and Danish automobile classified site BilBasen.

Shares of eBay (EBAY) are down 63 percent this year, following a gain of 10 percent last year. It slashed upfront fees and increased the final commissions on its traditional auction marketplace, while charging a flat rate to list an item for sale under a new non-auction Buy It Now format that allows buyers to pay a fixed price.

Some eBay customers have been critical of the tinkering. It also faces competition from Google, Yahoo and Amazon.com, which offer services similar.

According to Thomson Financial, analyst recommendations on eBay consist of four "strong buys," five "buys," 12 "holds and three "underperforms."

Chief Executive John Donahoe, expecting a "very challenging" holiday season, has cut its fourth-quarter outlook. There has been a considerable slowdown in all its businesses since mid-August, and a stronger U.S. dollar is hurting its international business.

But eBay does have more than 85 million active users, PayPal more than 63 million active accounts and Skype more than 300 million registered accounts. It is in excellent financial shape, generates lots of cash and is active in repurchasing its shares.

Despite its downbeat fourth-quarter prediction, third-quarter revenue was up 12 percent, to $2.12 billion, and it had net income of $492.2 million, compared with a year-earlier net loss, when it took a large charge.

Earnings for eBay are expected to rise 12 percent this year versus a 2 percent decline predicted for the catalog and mail-order-houses industry. Next year's earnings are projected to decline 1 percent compared with an 8 percent increase expected for its peers. The expected five-year annualized growth rate of 14 percent is 1 percentage point higher than the industrywide forecast.

QI have heard the term "breaking the buck" in regard to money market funds. I know Reserve Primary Fund did this due to Lehman Brothers debt securities. Is this a problem for all money market funds?

K.H., via the Internet

A"Breaking the buck" is rare, and money market funds are considered quite safe. But the episode with Reserve Primary Fund shook the confidence of many investors, who moved large amounts of money from money market funds into bank money market accounts insured by the Federal Deposit Insurance Corp. Yields are generally lower for those accounts.

The Treasury in September announced a temporary guaranty program for those money markets that pay a fee to participate in it. Coverage is provided to shareholders for amounts held in a participating fund at the close of business on Sept. 19. Any increase in the number of shares after that date will not be guaranteed.

Understand the basic difference between money market funds and bank money market accounts.

"Money market funds derive their returns from the short-term investments they invest in," said Greg McBride, financial analyst with Bankrate.com in North Palm Beach, Fla. "In contrast, money market account yields are based on whatever a bank decides to pay."

[brandon1984]

ebay is getting whats coming to them, slowly but surely

[helpme1]

I agree with the last poster. I just can't wait until Google or someone else start a site like ebay and like the old ebay was.

[yaw1800]

Although eBay may be goin thru its tough times, i still think its gonna be around for a very long time ... its going to be pretty hard for another company to sway an estimated 80 million + users, or even half of that, from a company thats been around for so long and still part of mainstream America .....

it would be a dream come true though!!

[brandon1984]

i think there are already millions of people that have boycotted ebay and millions upon millions of people have been suspended from ebay forever, so i believe that alone is enough to get google started

[brandon1984]

Originally Posted by Modee

The real question is not so much will EBAY go down, but will they change! (for the better)

i hope so, the only changing they've done is for the worst

[yaw1800]

What company, in your opinion(s), do you all think has potential to rival eBay?

Just a question out of curiousity ...

[aking]

Ebay/Paypal just needs to come up with a better system to manage the amount of users they have that they simply can't handle it. As Modee stated, they need to work on a more one-on-one system that contacts the user when something looks suspicious instead of just flat out limiting your account and making it absolutely impossible to ask questions or figure out how to lift it. They also need to me more specific in their messages concerning account limitation status. Sending the same automated message to everyone just doesn't cut it, for everyone's situation varies. People feel betrayed, almost as if you are being robbed out of your money when the dreaded "freeze" occurs. I know we have all seen the Ebay/Paypalsucks sites, lol.

Long story short, if eBay wants to get better. Their management needs to do some major assessment (ie, Lessons Learned) of the company's overall functionality and make some serious, SERIOUS changes.

[yaw1800]

Originally Posted by aking

Ebay/Paypal just needs to come up with a better system to manage the amount of users they have that they simply can't handle it. As Modee stated, they need to work on a more one-on-one system that contacts the user when something looks suspicious instead of just flat out limiting your account and making it absolutely impossible to ask questions or figure out how to lift it. They also need to me more specific in their messages concerning account limitation status. Sending the same automated message to everyone just doesn't cut it, for everyone's situation varies. People feel betrayed, almost as if you are being robbed out of your money when the dreaded "freeze" occurs. I know we have all seen the Ebay/Paypalsucks sites, lol.

Long story short, if eBay wants to get better. Their management needs to do some major assessment (ie, Lessons Learned) of the company's overall functionality and make some serious, SERIOUS changes.

i definitely agree .. i think at this point its almost like their "corporate ego" has blown out the roof .. like they dont care because they're already extremely well established

[aking]

At one point, I was thinking they were limiting accounts to kind of get people to stop using paypal as the numbers were too high. Then once they reach a managable level of users, things will return to the way they were.

[rollinj]

eBay's stock price is dipping like EVERY OTHER stock in the stock market.. You can't take that to mean eBAy is tanking.. no matter how wishful your thinking cap might be!