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There are lots of eBay rumor this week. First that they are buying then that they are selling.

First, eBay Inc to Acquire TenCent Holdings

http://mrwavetheory.blogspot.com/2006/09/ebay-inc-to-acquire-tencent-holdings.html

Then, Tom.com to Acquire eBay China and Paypal

http://mrwavetheory.blogspot.com/2006/09/tomcom-to-acquire-ebay-china-and.html

So, anyone know whether they are buying or selling?

Investors are bypassing the underperforming analyst and past press “unseating” and beginning to look pass quarterly ESP, Instead focusing on EBay ability to generate free cash flow.
The short term views of the stock completely ignore the company’s still powerful business model, instead giving way to unfounded “concerns” by the very same analyst(s) who are now reversing their prior crystal ball projections oops… predictions.
As they always do in Wall Street circles C.Y.A.

"Credit Suisse analyst calculated that since the new fees were introduced, store listings declined about 25% from peak levels, with 1,500 stores closing, and core listings rose 16%. Exactly what eBay wanted, exactly what analysts and investors were looking. So perhaps this could explain the nice gain today. Now it remains to be seen how the store closures will affect eBay, if at all."

I have to say, I just can't believe analysts and investors actually believe that ebay is doing better from the fee increase. Can you not see that the auction numbers are up ONLY because ebay is running one listing special after another?! Sellers ARE NOT moving items into core listings like ebay wanted them to do. I can't believe smart investor folks would be duped by simple listing specials. It makes me question one's common sense!

There are HUNDREDS AND HUNDREDS of sellers on ebay that refuse to be treated like lemmings, and we will not be forced by ebay to do what they want us to do. We're more than happy to take our items to other venues to sell, and no matter who says what, MANY OF US ARE SUCEEDING!! We're not sitting with lifeless shops in no man's land. Why pay super high fees on ebay if we have to do our own advertising anyway?! Sure, ebay raised the store fees so unbelievably high that they will not miss our money...they're too busy scraping everybody else across the coals! (Yeah, that's some "6%" increase, that numbers is amazingly far from the truth!!) Ebay has raised fees so high that they can chase off thousands of stores and still look good. BUT, the thing is... are they REALLY looking good, or are investors so worried about their stocks that they'll believe any numbers or analysts, just so they can dupe themselves into believing that all is well with ebay?

The truth is, all is NOT well with ebay, no matter what the numbers say. One glance at ebay's discussion boards will show that. If ebay keeps chasing off it's sellers and refusing to protect it's buyers (and in some cases protecting it's sellers), all that will be left is the scammers and fraud sellers. They have no costs but the listing and FV fees, and everything to gain, so of course they are not going to leave. Ebay is becoming well known for being synonymous with fraud. If ebay will not listen to the sellers who are SCREAMING for the site to be cleaned up, will it listen to it's investors if they demanded that ebay cleans up it's act? Or would it be that they're happy making money on fraudulent actions, so would not want it cleaned up?

I'm glad all I have invested in ebay is my business, not so much to lose as someone who holds ebay stocks.

And don't think for one moment the sellers have had their boycott and are now moving on, things couldn't be further from the truth.

This is to Al
If ebay increases the core listings or raises the store fee another fictitious 6% Which was (actually 200 to 500%).
They wont have enough sellers or buyers left to keep the stock holders happy!The listings are well over a million and a half down from 2 months ago when this Sellers Fee Hike all began. The only thing keeping them a float in the numbers game is there constant cheap listing come on offers to try and keep numbers up.For instance the listing comeon for china to list on the U S site . And that is not working as well as they hoped it would.It just ticked the seller off even more!
I have been a seller and a buyer on e bay for a few years. They have lost the buying from the sellers themselves. And we were a major source of income for ebay with our sellers fees and our buying.
Sellers are fed up with the numbers game and the refusal of ebay to be held accountable for thier mistakes.

I found it funny when eBay ran a listing special for users of "eBay India" to list specifically on the United States site. Oh look! Core listings are up thanks to India!

Good job on eBays part though, they really have the inventors fooled.

Investors are realizing that Ebay management did the right thing by focusing on the buyer conversion rates, core auction listings and gross merchandise volume. The fee increase will help on all these fronts.

Letting store sellers who only account for 8% of GMV hold the company hostage at the expense of the buyer, auction seller and Ebay shareholders was not a good idea. I hope Ebay continues to increase store fees.

Uh, about that core item increase?

Here's a link to the 221458 items listed on the US eBay site that are located in India. Take a look, and see how many you have to go through before you find one the seller is willing to ship to the United States.

http://tinyurl.com/zjvkn

(If you can't be bothered, here are a couple of fun factoids: of the total, only 18,000 items are listed in US$, and only 21,000 items can be paid using paypal.)

Why would eBay include hundreds of thousands of items unavailable to US buyers on the US site? It can't possibly be deliberate manipulation of the listing count to make the numbers appear "vibrant" enough to satisfy analysts who don't look beyond the totals, or could it?

I'll tell ya what:

Any of those who call themselves "analysts" who have not bothered to take the time to go cruise the site for a couple hours... do yourselves a favor and just pipe down.

Analyze this:

Based on what we're seeing, (that means those of us who have actually done business on the site), eBay's current business model is CHAOS.

I'm not even going to go into the laundry list of absolute garbage that's going on over there. You've heard it all and dismissed it... or ignored it.

The plain fact is this:

One day, very soon, the truth of what eBay has become will rear it's ugly head, in form so absolutely disgusting, it'll make your blood curdle.

But don't believe me. Don't become informed and protect yourselves. Don't ask honest people who've lost hundreds of thousands of dollars. Please, don't find out. We know lots of nice honest people who will happily take your journalism jobs when it instantly becomes time to replace you.

They call themselves investment journalists. They make me laugh. A bunch of twelfth graders can analyze reports and quote company propaganda as good as they do. Didn't most of them earn college journalism degrees? I guess reporting the truth was an alternate class... or they inhaled.

What about these "settled" class action lawsuits? I think I count five so far for a total of over 20 million dollars. Hmmm, that can't signal trouble. Where are the consumer advocates? Do you think an auto maker could just toss off this volume of trouble? I bet not.

The stock value rises based on settled lawsuits? Really, we're not that stupid. Who's minding the farm? There's a pack of wolves in the hen house.


Memo to Paypal:

Anyone who didn't sign off of those class actions still has recourse against you. Or didn't your lawyers inform you of that? Second rate attorneys I'd GLADLY face in open court. (Note the words OPEN COURT)

Don't worry, we have trial attorneys here in Wisconsin who'll show you how it's done, one of them being our Governor. He eats guys like you for lunch.

Just go ask Publisher's Clearing House... they know.



Here's one I'm banking on:

This new guy they installed at eBay China, he's a number cruncher of the highest order. If he's a man of integrity, then eBay North America is in SERIOUS trouble.

Let's assume he's a good man with his country's best interests at heart. When he sees the numbers that have jammed eBay statistics for the last four weeks and how it was done, he will immediatly demand cessation of these practices.

You'll see eBay listing volume drop by 50% in a day.

Gosh I hope he's a good man that doesn't want his country represented as a bunch of hoodlums. Oh, that's right, they're hosting the Olympics. I'm sure reputation doesn't count for much right now.
(irony intended)

I won't even speculate on the "patch" they must have devised for their Skype trouble. That's going to take care of itself. How, in one day, did they fix a systems hardware problem? By negotiation and a couple software discs? Are you guys that gullible?

Don't worry, I'm sure the problem will resurface before the regent's wallets slim down.

Ah yes, eBay has the time proven ultimate solution... cash in all the right places. Temporary at best, and never hard to trace.

The problem is that their old faithful revenue stream
has been blockaded.

So where IS that money coming from?

Real justice takes time my friends.

Pass it on.


Blessings to ALL!

Gary
:)

China? Let's see.

On the eBay.com site, there are currently 950,829 core items listed that are located in China.

Of those item, a total of 112,247 are listed in US$.

The other 800,000+ are listed in RMB.

And guess what? They're available only to buyers in China. http://tinyurl.com/ebkjf

But hey, what's a few hundred thousand renminbi listings among friends, when they're needed to shore up the share price?

I agree with those suggesting analysts and stockholders should actually look at the site and the listings which are currently on it. The overwhelming number of scam listings on hijacked accounts coupled with the listings for fake designer goods are all an indication of the mess that ebay is in.

The scammers using hijacked accounts are actually quite easy to spot. They were easier but, for some inexplicable reason, ebay changed the search parameters so that it is no longer possible to locate the scam listings by simply entering the email addresses used by the scammers into the search box (ticking 'search within descriptions') so you must go through the listings manually.

Still not difficult; most of the scammers list for 24 hours only, although some have got wise to this making them easier to catch and report and are now, cheekily, listing for 3 day periods (helping again to bump up the listing numbers). I have seen as many as 600+ items dumped onto a powerseller's account which had been hijacked; that's over £1000 worth of listing fees that seller would have been stuck with (oh yes, it's the hijacked seller who will be charged the fees) plus all the final value fees which would be entailed on these high-value items (laptops, plasma tvs, top of the range cameras etc).

Many of the scammers don't just rely on the listings ending sold, most (if not all) are quite happy to give a prospective buyer a 'buy it now' price; I was offered a plasma tv for $500 delivered - laughable I know, not too bright that particular scammer.

Of course, if you do become tangled up with any of these scams, you'll find not only will your ebay id and passwords for not only that account but probably also your paypal account (you'll be sent a fake paypal page to release the funds to the scammer) and your credit card details - in fact your entire id can be at risk - these are all now in your friendly scammer's portfolio.

The first thing you will know about this is when you get nasty emails from individuals who have apparently purchased goods from you for hundreds or thousands of dollars, threatening to take you to court etc.

Don't believe me, it's all there and anyone would be extremely shocked to see the volume of this 'trade' there is on ebay.

Want to believe averything in the garden is rosy? OK, then believe the management at ebay who resolutely refuse to implement measures (simple ones that other sites can achieve) in order to prevent or at the very least minimise these practices.

The ebay sites are wide open for this kind of abuse but, no, rather than spend a little of the money to police and protect the site, ebay are throwing out cheap listing offers right, left and centre in order to bump up the number of core auction listings.

If this is not an effort to deceive then I don't know what is.

Ebay management are slowly choking the sites to death.

I can hardly believe what I'm reading, Analysts think ebay is doing OK, and its Fee increase strategy is working. I'm afraid not, as another has commented, just take a little time to read the eBay Groups and Forums, and you will gain an insight that will tell you all is far from well.

The manipulation of listing numbers by offering India a cheap list option, plus the China Syndrome, cannot disguise the fact that instead of store items mobving to CORE they have moved to other places, and from what I read, are doing very nicely there thank you. Listings on Yahoo, Ebid, and even new site Tazbar are all growing consistently whereas eBay's whilst still large are not. The choice for buyers elsewhere is getting greater, and they face less chance of being ripped off.

Ebay has launched several new initiatives, My World, Express, but this is only smoke and mirrors to conceal a company in serious trouble. It's ill judged attempt to rebalance the marketplace has gone so badly wrong, they are like a rabbit in headlights, frozen on the spot. They won't be able to hide this much longer before they get found out, then perhaps the 'magic' will be the dissapearing top executives, probably with a dollop of investors cash!

An interesting debate. On this occasion, I fully endorse the comments made by 'bloggers' regarding how the listing numbers have been boosted.

I've mentioned in other blogs how one cannot reach a substantiated conclusion by predominantly relying on listing 'counts' alone, they are far to vulnerable for manipulation by the powers that be, if and when required.

A far more reliable indicator is buyer activity and eBay's average transaction revenue. From what I have gathered this has declined by 10% over the course of the past year. Although i’m not overly familiar with the internal activities of buyers and sellers on Ebay, from what I have read so far, higher priced items were placed in so-called 'shops', and auctions were used for (mainly) bargain basement items. If this is the case, then the increase of auction items is likely to reduce the average transaction revenue even further? Is it not?

Another factor worth considering is that if these so-called cheap listing days are responsible for boosting the listings totals, is not more likely to reduce the average transaction revenue even further? Considering many similar items will simultaneously hit the shelves (or auctions in this case), thus increase the competition, and thus reduce the final selling prices.

Any analyst who can claim any degree of integrity would realise that multiple factors have to be considered when making such bold 'calls'. In this case and others, it would seem specific statistics are being produced to justify specific claims. And why is there such an omission of data on buyer activity?

Via their occupational 'gaze', analysts are instinctively positivist in their outlook. As Ebay is such a multi-platformed, multi-cultural and globalised entity, positivist calculations do not paint a full picture, and therefore the totality of the scenario MUST be considered. One also has to question analysts’ vested interests. A ‘blogger’ earlier claimed that the sellers on Ebay were ‘Lemmings’. I would have to disagree. ‘Lemmings’ are known for their mythologised suicidal tendencies and for lacking vision. In this case, it would seem some investors are the ‘Lemmings’. How on earth can a company’s shares rise 5% solely based on the ‘call’ of an analyst who has obviously operationalised clearly flawed methodologies?

It has been commented on in recent news articles that Ebay have struggled to gain a foothold in China due to competition from ‘Alibaba’. From what I have gathered, Alibaba's marketing strategy has involved a more interpretivist approach and has researched the glocalised market based on 'verstehen' (meaningful understanding). If Ebay want to get back in touch with its users, I suggest they rethink their strategy rather than rely on the construction of ideological hogwash and false discourse(s).

I have only recently taken an interest into the activities of Ebay. Instead of gaining answers from my brief research, I am finding more questions that need to be asked.

To Alice:
Give me your degree of integrity, where should this stock price be, remember, be an instinctively positivist on based on your 'verstehen' outlook?

This one I have to listen to, you will become the new “E.F Hutton”.

#13 Is that a question Ann?

Yes it is Helen, I am awaiting the Cirque du Soleil answer.

Ebay's present stock price is not what you should be worried about. What you should be worried about is its future stock price, in 3 months, or 6 months, or 1 year. For publicly traded companies, it is essential to understand the concept that a firm's stock price is very much a reflection of what price investors place on that firm's future earnings.

While a corporation's present earnings are very important, the firm's fuuture earnings CAPABILITY directly affects the price premium that investors are willing to pay on the firm's present earnings.

So I'll take some of today's news and explain it. RIMM (Research in Motion) revenue is up 7.4% in F'07 Q2 over F'07 Q1, and revenue is up 34% in F'07 Q2 from F'06 Q2. Quarterly earnings were reported as $0.74 per share GAAP, or $0.77 per share pro forma. Q3 earning projections are 88-95 cents GAAP, or 90-97 cents pro forma. So yesterday, RIMM was at $86 per share, with a P/E of 43.65 times last years earnings. Today RIMM is up nearly $18 to $103.66 per share with a P/E of 52.62. Yesterday's after the bell earnings quarterly report partially drove this increase in terms of present earnings, but the increase is magnified because because investors have priced in what they now expect to be higher future earnings. And if future earnings turn about to be lower, then the stock price will fall.

Now look at Ebay. At $28 per share, EBAY P/E is nearly 33.8 times last year's earnings. Yestaerday, the stock was up nearly $1.50, why? Up beat analyst reports about Q3 listings growth, and the news of a Paypal settlement reached with 28 states. Yeah, that means that Ebay has a higher present value. But can this $1.50 per share increase mean that the present value of Ebay is really $1.50 per share more. No, obviously not. The difference has to lie in the future value of the company. Investors (many of whom are ignoring the 3 bearish analyst calls) are following the 20+ bullish calls on Ebay, because they believe the Ebay rubbish and analyst rubbish and are betting that Ebay will have a decent Q3 and strong Q4 due to the holiday season. The leap in the stock price yesterday was also a bet that Ebay's future earnings ('07, '08 and beyond) will grow because the listing balancing is "apparantly working according to some analysts who dig no deeper than the numbers."

But what really moves a stock's price is not just present revenue and earning, but the future revenue and earnings and expectations dictated by the Wall Street analysts. When this Ebay scandal blows up, if it blows up, Ebay's revue and earnings expectations could be cut substantially. The longer the scandal takes to blow up, the worse it could get. If the balloon were to pop now, Ebay's earnings expectations might be cut by only 25-50%, meaning that a $28 stock becomes a $14-$21 stock. But if it takes a while to blow up, and if it really goes down in a blaze of glory like Enron, earning expectations could be cut by much more, like 50-75%. Now a $28 dollar stock becomes a $7-14 stock.

Now, if the company had a tremendous revenue stream, the stock could rebound. But if a bunch of sellers leave, and if all the frauduluent listings are laken off, what does Ebay have. Answer: not nearly as much revenue. Less transactions on Ebay means less Ebay revenue. Less transactions on Ebay means less Paypal revenue. If Paypal raises fees to make up for it, even more people will leave. And Skype, I saved the best for last, it needs a lot of development work, meaning Ebay is going to have to spend money on improving it. So Ebay's stock price may not have the ability to recover quickly.

Now picture the additional harm that hundreds of millions or even billions of US dollars in damage awards from lawsuits claiming: (1) illegally supporting transactions involving fraudulent merchandise, (2) breach of fiduciary duty, (3) securities fraud, (4) accounting fraud, and others.
Believe me (I am a second year law student) there are lawyers allover the world who are starting to put claims together, and getting ready to sue Ebay. Furthermore, the thing that makes Ebay different is that they are not just a breeding ground for fraud, but they are profiting from fraud and protecting sellers of fraudulent goods. Believe me, this makes Plaintiff lawyers salivate.

Now picture the amount of goodwill that is lost, after a public scandal. Many people (some have already left) may no longer want to do business with Ebay, and Ebay may lose some business partnerships.

Bottom line is that Ebay could become a penny stock, IF THE WORST CASE SENARIO PLAYS OUT. And with management's track record, they are certainly steering Ebay towards a worse case senario.

Lets take a look at some prominent internet companies and their P/E ratios. GOOG is currently trading at $403 per share, or about 59.1 times last years earnings. YHOO at $25.35 per share, or about 29.8 times last years earnings. AMZN is $31.70 or 44.65 times last years earnings. Do you think these companies will be affected if Ebay goes down big time? I do...GOOG's share price could be cut in half. Why? Investors may suddenly favor the blue chips, and a lot of institutional investors could pull billions of dollars out of the internet companies, and stick it in dividend paying companies with a long track record. With so many lawyers lining up to sue, it makes investment in internet companies seem riskier than it was in the late 90s. THIS WORST CASE SENARIO MIGHT NOT HAPPEN. But if it does think about the impact on the financial markets.
As a tribute to Gary, what if the government, in the aftermath, regulates the Internet, what if we have 50 different Internet state sales taxes?

As a law student taking a class in corporate law right now, I must remind every one that shares of common stock are a claim on the residual assets of the corporation. That means that in a liquidation, all of the corporations debts (INCLUDING ITS LEGAL BILLS) are paid first, then its preferred shareholders are paid in full, and then the common shareholders are paid. Sometime, there is little or nothing left to pay out to common shareholders.


Peace, and God bless. PG looks real good right now.

We may be witnessing the downfall of a public company.

Ann, i'm not sure I fully understand the phrasing of your question, but I have absolutely no idea where the stock price should be. Neither do the analysts it would seem. That’s my precise point. Ebay are far too much of a multi-channelled and globalised entity to conduct basic quantitative methods such as listing 'counts' to boldly determine the stock price of a major plc. Where is the triangulation with BUYER activity such as their level of consumption, attitudes and intentions? I would also consider the constant negative press regarding 'scams' as another major deterrent to them. But we won't know if it is not sufficiently researched. Will we? Although many consumers I have interviewed often state 'fear of fraud' as a prime reason they do not shop online.

At present, there seems to be a reliance on 'talking-up the numbers' to create a sense of blind faith amongst the investors. I fully appreciate the need for bullish mentalities on Wall St, but there comes a point where bullishness just becomes bullshit.

In my line of work (researching consumer and social behaviour), it is vital to also tap MEANING in order to arrive at substantiated conclusions. 'Verstehen' is just that. Arizona Ann will not have the same trains of though or patterns of consumer behaviour as Shanghi Suk. Ebay have to realise that one size does not fit all. In my opinion, this is precisely why Ebay have failed to tap the Chinese market.

I have conducted many research projects which have involved qualitative methodologies as well as quantitative ones. Quantitative methods are usually the sole research tools of those with a positivist gaze; they only explain a small fraction of the full picture, especially if conflicting factors are involved. Qualitative methods provide a far greater degree of validity and UNDERSTANDING than glancing over a set of spreadsheets and questionnaires with biased sampling or SELECT variables. Besides, my ‘verstehen’ comment in my previous post was in reference to how Ebay should perhaps reconsider their marketing strategy. I suggest you re-read what I previously posted.

Alice investors do not give a "bullshit" about
"qualitative methodologies as well as quantitative ones"
What counts is one thing and one thing ONLY.
A business model ability to generate free cash flow,
and you still did not answer the Topic Question.

Hi Melly, when are we going to see an article that analyses the analysts in detail?

Hi Christine, Gary and Mike. Great posts.

Hi Ann, your spin would seem far more convincing if you could actually construct a coherent sentence. Mind you, I’d need a drink if I was an investor at the moment too.

Hi Alice, great posts. btw type in "Ann Lambert Ebay" in a Google search and all will be revealed.

Melly
Respectfully, what is going on here today?
You ask a objective question and the comments are just “twit(s)”
A law student off the marbles explaining high power financial analysis of stock pro forma, a consumer and social behaviour specialist with an acrobatic and colourful off the chart interpretation of EBay consumer “triangulation” ,what crap.
of course the colourful words.


Gary where are you, you are missed. Care to join me sharing a pint?