eBay Q3 earnings preview: Core growth, listing mix and China

Here is my guestimate. Ebay should hit the higher end of the forcast but I suspect they will predict slower growth going forward and this may dissapoint a lot of people.

I'm not sure if the ebay fee increase strategy is really working. I think that the auction markets in the US and britain and Germany are getting saturated -- but the bright light is paypal which is growing like gangbusters.

Let me preempt the bashers: "The numbers are all lies lies and ebay management is corrupt and has twisted the facts."

What you missed EBay
1 )has always issue caution and transparency in its guidance,

2) its has not missed a third quarter in 6 years,

3) the stronger US dollar will be a surprise boost for its offshore revenue

4) “Concerned” conversion rate will surprise the analyst.

5) Growth in BIG TICKET items increase 300%



The results will not be what the Less confident predicted.

Yahoo Panama is live today, Initiative with EBay on track for 2007
Tomorrow will not be disappointments, but an affirmative of what the business of "EBay THREE" units are.

Free Cash flow generators.

I do not believe ebay will not feel any loss due to the seller exodus. They are replenishing this with new member, many novices to the world of online trading. Ebay will make more money off of the initial "new blood" as it will take them quite a while to realize what exactly ebay is doing. I will say that Ebay has dropped some of the requirements to operating a storefront and during this previous quarter there have been numerous newbie sellers with very little ebay experience trying to get up to speed. This is very disappointing to see. Not just sellers struggling, but new ebay members with aspirations to be successful, yet not a basic understanding of what goes on or the risks and no direction given by Ebay. I believe the window dressing of what ebay offers looks very good on the outside. Mainly because those not in it, do not see the emptiness of lack of true business tools to enable commerce.

Ebay will address fraud with the least amount of effort, but enough to pacify those asking the questions. Fraud has been the number 1 issue on the marketplace for the 5 years that I've been here. During this time, ebay has done next to nothing. The features they have rolled out are quite obvious to be more to wear down individuals, than to remedy the situation. To ask ebay to put into place, solid monitoring tools, reporting mechanisms & policies to reduce the growing fraud that is committed on the marketplace... is to ask Ebay to hand over a trunk of gold. Ebay profits from fraud and by the time you read this there are dozens of individuals getting scammed, but very little reporting. Why? Because the system is in place to wear you down, not to remedy fraud. Ebay will not allow you to speak about this other than it happens. If you do, you will be reprimanded and your account is at risk of being suspended. If ebay put half as much energy in reducing the fraud on their site as they do in silencing those who have been victims of fraud and speak up, we would have a much safer marketplace and more confidence in the company and their brand.

Ebay Express has been more of a bait & switch, than anything else. The way that they brought sellers into stocking the shelves for EE was being misrepresented. Many ebay store sellers are not even aware that the merchandise ebay told them to stock for EE is now being disadvantaged as they get new merchandise sellers. But ebay needed those numbers for the previous quarter and to roll out the catalogue.

I know my post is very long but I realized that, while I also own shares in Ebay, that I'm not familiar with the terminology of GMV, sell-thru rates and other aspects of the financial market. I think that if sellers understood what analysts look for, that they would be able to communicate far better to others real world examples that speak to that.

Hi Melly,

Not sure how this affects tomorrows outcome, but I'm curious about the "expense-shifting" that happens whenever a promotion comes out.

Initially they will always advertise as "free-listing" or free feature with paypal or whatever. The seller gets charged, it gets notched up as "profit" for the company.

Then,... weeks (even months) later during another financial quarter, sellers get finally reimbursed for what should have been a "free" promotion. In effect, it's an evening out between q3 and q4 in terms of expense for ebay (and there have been many many promotions during q3), that it can make q3 seem much more profitable than what it really is (ie all profit, no expense).

Does anyone look at this when the results come out, or is it taken into account already?

With regards to china, I think the following alexa page-view graph says it all. Yes, it's not a perfect indicator and has it's flaws, but gives some idea where things are heading.

http://tinyurl.com/yljlr7

Sigh
Do you really what to read THAT all over again,

VC
I said before,
EBay has a built-in “Paragon Revenue Tenability” across its divisions,

The bottom line, master the art to coruscate.


In its history its has not lost revenue, decline growth or turf to no other company in its arena,

This management plays with Ace cards only.

The phenomenon of eBay-bashing is relatively recent. The people you so blithely denigrate as bashers had, until recently, a much more cordial relationship with the company.

As a shareholder, it would behoove you to heed these comments as a portent of trouble ahead, particularly if you do not use the site yourself and have no firsthand knowledge of its increasing dysfunction.

Last I checked, eBay’s instrinsic core site value is derived solely from fees it collects from sellers who rent space on its site to sell their (not eBay’s) merchandise. Its payment platform also benefits from these sales, as its primary use is as a mechanism to pay for eBay purchases.

eBay’s attempt to monetize every last millimeter of open space on its pages with paid ads may or may not be successful, and initial results won’t be known until this time next year. Were you aware that early tests have resulted in overwhelmingly negative response from buyers, who have been very vocal in sharing their objections to the overcluttered page layouts? Perhaps a cruise through eBay's message boards might prove enlightening. They're read religiously by management, who use them to gauge current site conditions.


I am not a seller, but I am a buyer on eBay as well as a longtime shareholder. I’m amused by the scrambling of analysts to assess eBay’s value by analyzing the entrails of its core listing totals, when in fact eBay actively manipulates those totals by controlling the flow of foreign items it presents on its US site at any given moment.

My personal pet peeve are the obvious 'planted' listings - take a look at this one and tell me why it’s appropriate that it appear on the US site:
http://tinyurl.com/ybn4pw

Spend 5 minutes looking around, and you’ll find thousands upon thousands more, all adding to the *cough* "growth" of the US site.

It’s in my best interest as a consumer and an investor to see eBay thrive. I’ve come to the sad conclusion that its current executive team has so poisoned the brand that nothing less than a clean sweep is needed in order for the company to regain its equilibrium.

Mr. Dimes,

I do honestly believe a clean sweep is at hand.

.

That's Ms Dimes, and I hope you're right.

Oh dear!

My deepest apologies madam!

I'm honored to have made your acquiantance.

Best of luck to us ALL tomorrow.

.

Sigh, when you have finished whining about the 'whiners' and bashing the 'bashers', maybe you should actually consider some of their comments.

Your attitude is incredibly symptomatic of Ebay's management. i.e. a refusal to address any of the blatant problems on the site (i.e. fraud, poor customer relations etc), instead of papering over the cracks.

If you are so objectionable to merchants (i.e. CUSTOMERS) raising their concerns on this site, then may I suggest you invest elsewhere. Ebay needs sellers to tick; they're all in the 'spaghetti sauce' remember!

Just be careful to make sure your spaghetti isn't past its sell-by-date.

It is interesting to note that figures are expected to show some modest growth, this is what the market hopes for and no doubt eBay will deliver. This however does not answer the fundamental question, is Ebay in decline? We have seen various strategies to rebalance things, and the word on the street is they are not successful.

Whilst they feel they can lose large tracts of sellers (and buyers), recent events have created a workforce for the opposition who have an almost missionary zeal. You only have to look at the growth figures in the listings for the competitors and they have shown steady growth since July, whereas Ebay figures remain relatively constant.

The increased fees are now starting to bite, and store sellers who have hung on, in the hope of better sell through rates are now re-appraising their situations. These may be replaced by newcomers, who have yet to get to grips with the 'magic' of selling on eBay, but I suspect the drop out rate may be higher than they imagine.

Studying the bidding activity over the last few weeks you get the distinct impression that it is still slowing, and this will be a concern for all sellers. I appreciate the downturn may be across the marketplace, but it is all about perception, and with the bad feelings generated by an out of touch management, will no doubt convert into more departures of sellers, who also are buyers. The more active selers who have jumped ship are now no doubt purchasing elsewhere and eBay is no longer the first port of call.

On the subject of fraud, one can observe an increase in this activity, and one person defrauded is likely to influence tenfold potential eBay users. This single factor may yet be their downfall, and as good sellers have left or continue to leave, so the proportion of fraud will increase, a not very attractive proposition for buyers.

As they say 'Time will Tell' and whilst tomorrow may not be all doom and gloom, I still remain to be convinced that all is well.

Just one note of caution. This is NOT the quarter to be making significant long term judgements on. The fall out from the summer may not become evident in full until the year end. It is quarters 1 & 2 next year that will prove more 'interesting' IMO.

LOL if you analyze all the commments made to date by these anti-ebayers they all sound the same and have absolute no clue on evaluating a company from a investor standpoint.

Their famous words "the sky is falling and investors are blind to evil ebay fraudulent activities, shifting of number and spin". The go cry to the SEC! Put your money where your mouth is!:)

But then again what should I expect? :) It's all self-serving.

In the money at $24! Woo hooo

P.S I purchased Skype for FREE :) Gotta love it. It's all in the Spaghetti Sauce! mmmm mmmm

It's ok Gary, Helen, Joyce, VC Snale, Fruity, Alex, Dimes et ilk, I won't say anything if you pick up a few shares :). I'm sure the extra cash will help out during XMAS.

It will not be until the end of next year's first quarter that the effects of the fee hikes and poor trading (for online sellers) shows through into the results. In the UK it will be November before the 90 day SIF listings end and no doubt ebay's management is hoping there will be a surge in listings for the Christmas period to counteract the loss of sellers which is still going on.

This morning I noticed a scammer dumping over 1000 listings onto a hijacked account, fair enough, these were removed (while the scammer was still listing) but they will be back on the site by now, spread around in various accounts.

Worryingly, many are now appearing on the site with as little as six hours to go until the auction closes; this should not be possible but is a regular spectacle I and others have observed.

Clearly the Trust and Safety team (I understand in the UK this consists of 5 people at most) cannot be expected to cope with 1000's of scam listings appearing on the site, coupled with the fact that no sooner are they removed than the listings reappear, it's a constant battle to find them.

There are remedies available to prevent this happening, such as blocking any listing which contains email addresses and/or website details but ebay will not use these methods.

Western Union is a banned payment method yet a search (including within item descriptions) will return in the region of 30,000 listings. Why are they on the site?

What might happen if all the scam listings, all those seeking banned payment methods and all those selling fake items were removed from the site? Just how many listings are actually genuine.

Personally, I would also remove all the penny ebook sellers as well since these provide feedback farms, enabling scammers to rapidly (within hours) build up feedbacks between hundreds of accounts which are then use to defraud countless individuals.

What it amounts to is that the membership figures are false, the listing figures are false and nothing which comes out of ebay HQ can be believed.

And all that without any consideration of creative accounting too.

Helen: You make an excellent point. Q3 and Q4 are always high for eBay, because they reflect the Christmas season and the rush for all the "Sold out" items (i.e., 10th Anniversary Tickle Me Elmo doll). The quarters represent the best for eBay overall, as long as the sellers are able to list their items, and the buyers are able to buy their items. Site performance should be eBay's number one priority for this next quarter, and will most likely have their highest priority for the next quarter.

What is interesting is the exclusion of buyers from the "customer" list in these discussions. Perhaps the sellers forget that their listing fees pay for their presence on the site, and if they are Store items, only a portion of their presence on the site. It's sold items that represent real revenue to eBay, and therefore the buyer drives success for the seller and eBay. If the buyers do not buy, the sellers do not sell. If big sellers leave eBay, all the little sellers take their buying volume.

That's not saying that eBay needs to focus only on Buyers, but they do need to be a consideration for overall growth. That's why fraud has such a huge impact on eBay. One buyer that never comes back can represent at least 20 people that will never try eBay because of word of mouth.

I cannot stand Wal-Mart's business practices, the way they treat their employees, the slave labor they "employee", even the way the inside of their stores look. So you know what I don't do???
I don't shop there and I don't own stock in the company.

There sure is a lot of talk about how despicable eBay is, how corrupt they are and how they can do nothing right. Let me make a suggestion.....go elsewhere then. Take your business to another platform. Sell your stock and leave, find somewhere else to get great deals and sell the junk from your attic.

Is this a blog for serious investors or for sellers and/or buyers to air their gripes about things that only effect them personally and have no bearing on the growth (or otherwise) of eBay stock.

Most of these posts are laughable.
I will repeat yet again....if you have no faith in a company, do not agree with their business practices, and feel that they are all in all corrupt, take your money and your business and go elswhere.

Goodness, just reading all of the bloggs makes me feel that everyone is forgetting about what EBAY is all about. I absolutely Love to bid and buy items on ebay! The Categories on ebay are incredible! Where else can one go and find items Made in America? To be able to pick out a topic, and find treasures that we can't find anywhere else is amazing. Many of us don't have the time to go out and drive all over the place to find something in one given catagory that Ebay has available in multitudes,especailly since the Ebay marketplace is a virtually global. If the seller has what I am looking for, I'll buy it. So far, I have been 99.9% happy with my purchased merchanize. I save so much money in the long run by shopping on Ebay. Ebay has the unique niche of bringing buyers and sellers together and it's a positive and exciting experience. EBAY ROCKS!