posted on January 24, 2008 11:17:17 AM new
EBay shares slide on disappointing outlook
Changes to fee structure coming; brokers downgrade shares.
SAN FRANCISCO (MarketWatch) -- EBay Inc. saw its shares slip Thursday after the online auction giant issued a disappointing forecast for the year, based in part on upcoming changes to its fee structure and a cautious outlook for consumer spending.
I think many of you will be interested in reading the rest of this article from CBS Marketwatch.
posted on January 24, 2008 11:25:52 AM new
EBay shares slide on disappointing outlook
Changes to fee structure coming; brokers downgrade shares
By Dan Gallagher, MarketWatch
Last update: 12:59 p.m. EST Jan. 24, 2008
SAN FRANCISCO (MarketWatch) -- EBay Inc. saw its shares slip Thursday after the online auction giant issued a disappointing forecast for the year, based in part on upcoming changes to its fee structure and a cautious outlook for consumer spending.
The forecast came as part of the company's report for the fourth quarter late Wednesday, in which earnings jumped 53% on strong sales for the holiday season.
EBAY) is in the midst of dramatically revamping its core auction business to better compete with similar offerings from sites such as Amazon.com. The re-alignment comes as the company shifts leadership to a new CEO -- John Donahoe -- who was named Wednesday as a replacement for retiring chief Meg Whitman.
The changes, along with concerns of a slowing economy, caused Citigroup analyst Mark Mahaney to grow more cautious on the shares, downgrading eBay from a buy rating to hold on Thursday following the report.
"EBay's pending price actions (listings fees reduction) creates a material P&L [profit and loss] unknown," Mahaney wrote in a note to clients. "And, despite several initiatives, eBay has yet to prove it can reaccelerate its core marketplaces."
Steve Weinstein of Pacific Crest also cut his rating on eBay's shares - from outperform to sector perform - citing "lackluster growth and uncertainty surrounding the fee changes" in a report to clients.
Shares of eBay were trading down $1.75 at $27.19 by midday. The stock has lost about one-third of its value since peaking above the $40 mark in mid-October.
Earnings jump, but guidance below expectations
For the period ended Dec. 31, the company earned $530.9 million, or 39 cents a share, compared with earnings of $346.5 million or 25 cents a share for the same quarter the previous year.
Excluding charges related to stock-option expenses and other items, the company said that it earned $611 million, or 45 cents a share, for the fourth quarter -- beating the 41 cents a share expected by analysts, according to estimates from Thomson Financial.
Revenue grew nearly 27% to $2.18 billion. Analysts had been expecting revenue of $2.14 billion for the quarter.
The company said that its gross merchandise volume totaled $16.2 billion for the quarter, up 12% from the previous year.
For the first quarter, eBay said it expects revenue to come in between $2 billion and $2.05 billion. Analysts were looking for revenue of $2.15 billion. Earnings for the quarter are expected to come in between 37 cents to 39 cents a share, below the Wall Street forecast of 40 cents a share.
For the full year, eBay expects net revenues in the range of $8.5 billion to $8.75 billion, with earnings per share between $1.63 and $1.67. Analysts were expecting earnings of $1.66 a share on revenue of $9.02 billion.
EBay CFO Bob Swan said several factors contributed to the forecast. The company plans to implement changes in its pricing structure that may eat into results this year. Another factor in the company's forecast is "a cautious outlook for consumer spending in our major markets," Swan said.
Some analysts believe the company is setting the bar low to help its new CEO make a strong start this year.
"We believe that eBay will easily beat these diminished expectations in 2008, but the low-ball guidance could well backfire; it has already obscured the company's excellent Q407 performance, and we think it will discourage investors from buying the stock until more reassuring results restore confidence in Q108," Jeff Lindsay of Sanford Bernstein wrote in a report Thursday.
Lindsay has an outperform, or buy, rating on eBay's shares.
Changes coming
As part of the changes at the company, Meg Whitman will step down from her roles as president and CEO on March 31 after 10 years with the company. She will retain her seat on the board of directors.
The announcement confirmed previous media reports that Whitman was planning to retire. She joined eBay in March 1998, only months before the company went public.
"As many of you know, I have repeatedly said that 10 years was about the right amount of time for any CEO to stay at the helm of a company," Whitman said during a conference call Wednesday. "Now that I have reached that milestone, I've decided that it's time for eBay to have new leadership, a new perspective and a new vision."
The company said its board voted unanimously to elect Donahoe to the role. Donahoe joined eBay in 2005 from Bain & Co., the consulting firm where Whitman previously worked.
Also, eBay is planning to announce next week large-scale changes to its fee structure to better compete with rival auction sites, mainly one operated by Amazon.com (AMZN
Amazon.com, Inc
News, chart, profile, more
Delayed quote data
Add to portfolio
Analyst
Create alert
Insider
Discuss
Financials
Sponsored by:
AMZN) .
On the call, Donahoe told analysts that the company will place more emphasis on fixed-price sales, which account for more than 40% of the company's gross merchandise volume.
"Auctions attract enormous value selection and fun to eBay, but for many sellers and buyers, and for many products, auctions are just not the optimal format," Donahoe said. "So what we need to do is marry the value selection and fun created by auctions with the convenience and opportunity inherent in a fixed-price setting."
The company also plans to significantly lower the up-front fees charged to sellers for listing an item on the site. The company plans to modestly increase the percentage of the final sales price that it takes, but says its overall "take-rate" will be slightly lower as a result of the changes.
"In essence, we believe that sellers will be willing to list more high-quality inventory on eBay if we were to change the risk/reward ratio in their favor, namely by reducing upfront listing fees and increasing final value fees," CFO Bob Swan said during the call. End of Story
posted on January 24, 2008 11:49:28 AM new"On the call, Donahoe told analysts that the company will place more emphasis on fixed-price sales, which account for more than 40% of the company's gross merchandise volume."
See, Ralphie? There IS a Santa Claus!
"Happy day are here again The skies above are clear again So, let's bark a song of cheer again... HAPPY DAYS ARE HERE AGAIN"
posted on January 24, 2008 12:06:17 PM new
So, does that mean better exposure for stores? I sure hope so. The site is so dead right now I'm barely keeping my head above water.
But remember folks. . .the economy IS good. . .we are NOT in a recession nor are we headed for one. . .just keep saying that over and over and over in your head. . .maybe you'll make yourself believe it.
posted on January 24, 2008 01:03:16 PM new
I read somewhere about 18mos ago a long discussion about all the financial stink-bombs that are set to explode upon the US in the months after whats-his-face leaves office...The poor schmoo who follows is gonna be hit dramatically by the proverbial kaka-poopoo going thru da fan...
NTM: get ready & fasten yer seatbelts, boils & ghouls! The FUN is about to really explode...SOON!
Ya know that CRAZY MONEY GUY? The one who SCREAMS & SCREAMS?
He did some interesting research about, NOT the mortgage companies themselves, but rather the INSURANCE COMPANIES that insure the mortgage companies...GUEsS WHAT chippermonkees? If ya think the markets are getting hit NOW, just wait for the REAL DISASTER to hit in about 6 weeks! Can anybody spell DEEP RECESSION?
Oi! Ralphie is putting his paws over his eyes and mumbling: "Plastics, Ben...Plastics"
Some have been hit already, and have had capital infusions and debt timing relief.
The amazing thing is that the Fed and politicians think that more cheap money will fix the problems that were caused by, um, ah, cheap money. Always put off pain, your children can take it.
posted on January 24, 2008 09:32:20 PM new
Remember one think, Bush never told all these people to go out and buy houses and cars that they didn't have the money to pay for. You control your own finances not the Government. Not blaming any President but when we started giving our jobs to illegals and sending them to every country other than our own, we are going to reap what we sowed.
**********************************
Just wanted to let you know about this new website that pays us up to 36% of the seller's fees whenever we buy something on eBay.
We can also get cash back at other retailers and earn extra cash when other people shop.
Just use the link below to check it out and let me know what you think!
posted on January 24, 2008 11:03:55 PM new
"The company also plans to significantly lower the up-front fees charged to sellers for listing an item on the site. The company plans to modestly increase the percentage of the final sales price that it takes, but says its overall "take-rate" will be slightly lower as a result of the changes.
"In essence, we believe that sellers will be willing to list more high-quality inventory on eBay if we were to change the risk/reward ratio in their favor, namely by reducing upfront listing fees and increasing final value fees," CFO Bob Swan said during the call."
This is really good news...and a necessary move for ebay. I don't expect changes to the store setting structure, but more of an impact on fixed price listings that run for 7 days. With a lower listing fee and a higher FVF, it will probably bring me back to do more sales there.
posted on January 25, 2008 05:16:24 AM new
Mah - And we never told Bush to send all our money overseas either, where they spend cents per gallon not dollar per gallon for gasoline!
I married my wife for her looks, but Not the one she gives me lately!