Sunday, March 8, 2009 - Another stock market Analyst... Some nasty ebay questions.
OK so I kind of hate "market analysts" and their "wall street speak", because some of it is absurdly bullshit - and they have a tendancy to weave around the issue, instead of calling it for what it is in point blank terms.
But the idea I think is to not shit can something, just because this guy "apparently" doesn't "get it" that Ebay is deservedly going down the tubes - because they are unethical, irresponsible and greedy; and they treat the sellers and buyers with contemptable indifference and abuse.
And - just because the analysts are not leading the charge in the lynch mob, doesn't mean they are not involved with something else useful - like tying nooses in the rope.
So I have found that generally speaking, somewhere in the details can be some really insightful and pointed issues.
And at worst, one might just learn something.
http://www.collins-stewart.com/nydocuments/20090305_EBAYHold.pdf
Top Questions for EBAY Analyst Day
We will be attending eBay’s analyst day on March 11th in its corporate
offices in San Jose, CA. Below we present our top 15 questions that we
would focus on during the analyst day.
1. Current trends in E-Commerce vis-à-vis weak economy. eBay is not
only one of the largest E-Commerce destinations in the US but also has a very large international footprint. We would like to know what are the current trends in the E-Commerce industry, especially by category and by geography. We would particularly like to know how the weak global
economy is impacting the average order per active user, listing growth,
ASPs, and listing conversion.
2. Progress on Marketplaces transformation to date vs. eBay’s internal
goals. In early 2008 eBay embarked on transforming its aging
Marketplaces, which in our view suffers from structural problems and
competitive pressures. We would like to know the progress eBay has made so far revitalizing this business and how does it compare to the company’s internal goals. We would be very interested in hearing what metrics eBay is using to track the progress of Marketplaces transformation and how the progress has trended to date on these metrics. We would also like to know if eBay is willing to put a timeline on the Marketplaces transformation in terms of milestones based deliverables.
3. Integration of Bill Me Later (BML). eBay closed the acquisition of BML in December 2008. We would like to know how the integration of BML is going. We would especially like to focus on – timeline for the acquisition integration, any challenges or surprises so far, and management’s current view on the likely synergies vs. the view at the time of acquisition.
4. Competitive dynamics in E-Commerce. We would like to know what
the current competitive dynamics are in the E-Commerce industry,
especially E-Commerce market share trends in the US and internationally for eBay vs. Amazon and other pure play niche players or vertically focused E-Commerce companies.
5. Competitive dynamics in Online Payments. In the last two years the
competitive landscape for online payments has changed with the entry of
many new players, especially Google Checkout and Checkout by Amazon. Though PayPal has been a distant #1 online payments provider, with the acquisition of BML, eBay’s presence in the online payments industry has only gotten stronger. We would like to know the current competitive dynamics in the online payments industry, especially how BML acquisition has been helping and will help in building stronger competitive moats.
6. Signs of traction for BML. During the December quarter, BML handled $160mm TPV for eBay (less than 2% of the TPV handled by PayPal). We would like to hear any examples of signs of traction for BML. We would be particularly interested in management commentary in terms of adoption of BML on-eBay and off-eBay, adoption by size of merchant, ratio of BML users using it for checkout only vs. checkout and credit provider.
7. Current default risk trends with BML. Due to the weak economy and
financial crisis we have been hearing that the default risk on credit has gone up across the board. We would like to know the current default risk trends with BML and how the company is hedging its default risk.
8. International roll-out plans for BML. Unlike PayPal, BML is currently
available only in the US. We would like to know eBay’s plans to roll BML out internationally. We would be interested in the timeline and the top
geographies where we should expect the first phase of international roll-out.
9. Threat of cannibalization for PayPal from BML adoption. We would
like to know if the adoption of BML by merchants is causing any
cannibalization of PayPal. For context, for merchants, PayPal costs roughly 3.9% vs. BML at 2.4%. However, BML can generate nearly 1,000 bps more for eBay because of interest income (credit facility to consumers) and finance charges. In our view, the ramp of BML is risky because it can cannibalize PayPal's higher take-rate if customer adoption of BML as a credit provider is limited and default risk goes up.
10. Key metrics trends for Marketplaces. We would like to know what are the overall trends of key metrics for eBay Marketplaces, especially growth of active users, total number of new listings, ASP, and GMV.
11. Gross margin trends for Marketplaces. During the December quarter, the gross margin at eBay started hurting due to promotions, discounts and coupons offered to merchants. The company specifically mentioned to analysts not to expect a rebound in gross margins anytime soon, but we would like to know how aggressive eBay is currently in terms of offering promotions, discounts and coupons to the merchants.
12. Trends with online advertising. Online advertising used to be the
fastest growing revenue line item in eBay’s P&L. However, due to
weakening ad spend environment, this business has suffered. We also did notice higher attach rate for banner advertising by listings on eBay
Marketplaces. We would like to know what are the current trends with online advertising, especially sell-through rates, eCPM, and conflict with listings at Marketplaces.
13. Relationship with Microsoft. eBay is perhaps the largest partner
participating in Microsoft’s Live Search Cashback program. We noticed very lucrative promotions and deals offered by eBay on Live Search during 2008 holiday season. Even Microsoft has talked about this relationship as an example of a sign of traction for its Live Search Cashback program. We would like to know how this program has faired for eBay, the economics and effectiveness of eBay’s partnership with Microsoft, and how big this relationship can be in the coming years.
14. Trends in eBay’s comparison shopping business. During the
December quarter earnings call, eBay mentioned that its Shopping.com
business continues to suffer from the changes made by search engines,
which made traffic acquisition more challenging. However, ValueClick
reported rebounding of business trends for its comparison shopping
business during their December quarter earnings calls and several times
after the earnings call. We would like to know if eBay has some unique
challenges that are making the rebound of Shopping.com tougher than
other comparison shopping offerings in the market. We note that we had
heard several data points in the past that suggested increasing traction for comparison shopping business during the December quarter.
15. Any near-term plans to spin off Skype. During the last earnings call,
CEO Donahoe again highlighted that there are not many synergies between eBay and Skype businesses and eBay views Skype as a stand alone business. eBay has already taken one time charge for Goodwill impairment for the Skype acquisition. We would like to know if management has any near-term plans to look for a potential buyer for this asset.
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