UPDATED: eBay Inc Reports Second Quarter 2008 Results

Patricia1On 07.16.2008 at 6:44 pm Said:

So…..what do you all make of the 7 percent drop in Ebay stock after hours today? Do you think the weakness in core auctions is finally sinking in to wall street?

petewheatOn 07.16.2008 at 8:36 pm Said:

This is a quote from a Reuters article today.

” EBay is having trouble attracting new users beyond the discount shoppers attracted to its auction format for which it’s famous. Active users rose a mere 1 percent in the quarter, even as listings surged 19 percent from a year ago.
In its auctions, average selling prices fell 6 percent due in part to discounts in Germany, a shift by U.S. and UK consumers to lower-priced goods, and efforts to curb fraudulent higher-priced listings, Chief Financial Officer Bob Swan said.”

Sellers like BUY can almost by themselves account for the 19% increase. The idea of a shift by U.K. and U.S. consumers to lower priced goods means what exactly? as I thought the eBay market place was already appealing to low end buyers. I don’t see how curbing fraud enters into lower prices unless you have been achieving higher Value Fees with allowing fake items.

MechelleOn 07.16.2008 at 8:37 pm Said:

yes Patricia I think so

When you tell the public that the marketplace is weak and give a negative forecast for the rest of the year it causes people to say - woahhh.

They are probably intelligent enough to realize that the marketplace is essential to the growth of all other eBay holdings. Simply put (and as I have said before) without us eBay has nothing.

If the marketplace is weak that will result in paypal being weak. If the marketplace falls paypal will dwindle. We are the tool that builds paypal- it is our using the system that allows it to permeate the rest of the e -commerce market. When someone new buys from one of us on eBay they open a PayPal account, and because so many people have a paypal account from eBay other merchants and merchant services have picked up paypal which means those people who entered eBay to shop from you or I and opened a paypal account will likely use the easy in your face button for paypal when making purchases outside of eBay, rather than punching in all the card crap.

So when investors hear the marketplace is weak- and most importantly active users only grew 1% they know things are looking worse than what eBay is projecting and forecasting.

They are probably also concerned that the eBay marketplace is not swinging high with our economy so low. Auctions should be storming right now, but they are not- interestingly freaky.

“The company was quick to point out that while its marketplace is experiencing some weakness, there are other revenue streams that it is increasingly relying on, including classified ads, PayPal and Skype. PayPal’s revenue in the second quarter was up more than 30% while Skype was up more than 50%.”
(eBay Shares Tumble (Update), TheStreet.com- Pia Sarker)

“In the clearest sign of a slowdown in its core business, Ebay said the value of goods sold through its sites, known as gross merchandise volume (GMV), rose only 4 per cent in the three months to the end of June, excluding the effect of exchange rate changes, half the growth rate of the preceding three months.” (Ebay slips 7% as key measures decline, FT.com- Richard Waters)

But analysts remained skeptical that eBay was showing progress in its efforts to re-accelerate its core auction business.

“GMV and active user trends suggest (a) real turnaround (is) not yet in sight, ” said Citi analyst Mark Mahaney in a note.” (UPDATE: CEO Says EBay On Track Despite Auction Concerns, CNNMoney.com- Scott Morrison).

“”While PayPal revenue, Skype revenue, and margins were encouraging, we believe investors were looking for eBay’s GMV to improve, which has not taken place,” said Goldman Sachs analyst James Mitchell in a note.” (UPDATE: CEO Says EBay On Track Despite Auction Concerns, CNNMoney.com- Scott Morrison).

Well, maybe things will be better next time with your ad revenue

“Chief Financial Officer Bob Swan noted the company increased guidance for the rest of the year and he stressed that it was focused on driving traffic to its sites, which it will be able to monetize not only through listing and sales fees, but also through advertising and its PayPal unit.” (UPDATE: CEO Says EBay On Track Despite Auction Concerns, CNNMoney.com- Scott Morrison).

However, the problem with eBay wanting to rely on the ads is that those ads won’t bring in much revenue without us- the traffic generators. Not sure how many people are going to stick around once they see their product they just purchased to sell their merchandise on is framed with ppc ads. I think Q3 just might surprise everyone!

hmmm, maybe eBay is learning not to put all their eggs in one basket just the same as we are!!

MechelleOn 07.16.2008 at 8:56 pm Said:

I didn’t say anything out of line Richard- geesh

dimesOn 07.16.2008 at 9:02 pm Said:

Fewer people willing to pay high prices on eBay for fear that the items are counterfeit?

Thousands of SUV’s and minivans and gas-guzzling pickups that no one wants?

Buy.com with its millions of listings (half a mill at a time with what, five day turnover?) = more cheap stuff that isn’t attracting anyone, given the flat user growth.

More than 50% of its net marketplace revenues are generated from international sites, where eBay isn’t as played out. In the US, we’ve been there done that.

Patricia1On 07.16.2008 at 11:05 pm Said:

Mechelle - I have a feeling the next screaming fit the sellers will have will be when the new auction page designs come out. Oh boy…they haven’t heard anything yet! I simply cannot imagine any of my paintings on auction with paintings from other artists on the same page I’m paying for! Ouch!!! Glad I’ve weaned myself off ebay except for a couple of listings now and then. This time last year I was selling 50 to 60 pieces a month and had a nice ebay store too! All that business was lost to me AND ebay and its a story I hear over and over again. I’ve learned to make do with less and the stress relief is well worth it.

MechelleOn 07.16.2008 at 11:35 pm Said:

Yep, I think when they see the ads cascading their listings it’ll be all over. I am appalled they have them on the site at all. Especially the msn live earn cash ad- now they are paying the buyers to leave and them blaming us for the empty house.

Actually, the powersellers are a bit peeved to put it lightly that JD said the low increase was because of our powerseller rewards, as though he is now some how disappointed that things have gone better than expected. Of course not exposing the millions of dollars of free listings (that 19% increase) given to buy daily. Yep we didn’t bring in enough to cover buy’s bill so it is all our fault.

yes it is going to be very interesting- ha ha ha

BillOn 07.17.2008 at 12:44 am Said:

I noticed you can actually read ebay’s 2nd quarter earnings call transcript in its entirety at Seeking Alpha. You can click on the link below to view it:

http://snipurl.com/2zyxa

MechelleOn 07.17.2008 at 2:21 am Said:

Oh Boy, I just finished reading the transcripts- that was ugly!

The effort eBay put into selling PayPal , skype, and the Ads fell on def ears. They didn’t lose focus of the pie by getting swept away by the whipped cream though your efforts where clear.

The eBay marketplace is only 57% of the pie, 26 paypal, and 11% the ads placed throughout our market, skype and some odds and ends.

Paypal is making huge growth of that 26% 13% is from off eBay merchants.

So - 57% is the eBay marketplace transactions, 11% comes from the ads placed within the eBay marketplace to gain from the traffic we (sellers) bring to the marketplace, and 13% of paypal are solely eBay marketplace transactions.

So, as much as the “leaders” attempted to draw focus away from the failing marketplace by pitching the whipped cream as though it is now the filling, they didn’t eat any.

81% of the pie and the whip cream belongs to the marketplace.

It is so funny it is sad to read them trying to present the 19% as though it is the only thing important anymore. Hell, maybe they took that as sincere and it scared them off and that is why the sharp after hours drop. I don’t know, but it was so uncomfortable I felt bad for them- I really did.

GailOn 07.17.2008 at 4:51 am Said:

That 1% increase in active users can probably be attributed to current users registering additional IDs. When eBay has quality sellers like bonknut (50.7%) registering multiple IDs (e.g. stairwayhoundfind and shippaper) to list 1-cent books, I wouldn’t exactly call that a positive step for the marketplace.

A 19% rise in listings means absolutely nothing. The marketplace is still being flooded with garbage. What’s the actual STR?

dimesOn 07.17.2008 at 6:58 am Said:

Good point. I hadn’t considered the phenomenon of sellers getting new throwaway ID’s to improve their placement in Best Match.

dimesOn 07.17.2008 at 7:17 am Said:

Wow. The stock price is down to $23.99 and the market hasn’t even been open for an hour.

Avg daily trading volume is 14 million. It’s already at 20 million this morning and climbing fast.

Time for eBay to get in there and start buying back shares.

MsFish213On 07.17.2008 at 10:45 am Said:

When the changes were first announced back in January, quite a few “seasoned” sellers started creating multiple ID’s for back up in case they got hit with a neg or had their DSR’s dinged. Then they found out that they had better placement in Best Match.

MechelleOn 07.17.2008 at 11:19 am Said:

wow!! I bet they are buying like mad

patricia1On 07.17.2008 at 11:25 am Said:

The extra ID’s is probably correct. Everyone on the boards seem to have a zero posting ID, myself included and who knows how many more selling ID’s. I have a spare selling ID I didn’t have before. So this one single registered user actually has 3 ID’s and counts as three people!