eBay -- liveblogging third quarter results

Posted Oct 18th 2006 4:54PM by Melly Alazraki
Filed under: After the Bell, Earnings Reports, Live Coverage, eBay (EBAY)

Okay, so eBay Inc. (NASDAQ: EBAY) is about to start the webcast soon. You can see quick results here, more comprehensive ones here, and the company's own presentation here. So far so good, the stock is trading up in after market trading.

(All times are p.m. Eastern.)

4:55 I'm all ready, the headphones are on, I keep checking the after market trading and reading the results intermittently. The webcast should begin in a few minutes. Too bad about fourth quarter but good stuff on auction growth. PayPal revenue actually rose by over 40% this quarter. Part of the reason for the better profits is lower tax rate.

[[For some reason the webcast didn't work for me and it took me a while until I tracked down the phone number with Amey Stone's help.]]

5:09 Meg is speaking. Internationally GMV growth of 21%. Europe GMV growth accelerated. Asia the markets are competitive.

5:10 eBay Express - launched in Germany and the UK. Seems a success.

5:11 eBay Motors - also growing. Shopping.com is the #1 comparison site in US, UK, Australia.

5:13 PayPal - 24% of total revenue. $9.1 billion. Excellent quarter. The presentation is "marketing heavy." Meg is talking fast and tries to convince.

5:15 Skype - 26 million users now, growing daily. Users are using WiFi phones to make Skype calls.

5:17 Synergies -- Skype and PayPal. Expects to add synergies. She sees great promise. Testing the buttons in many markets and sellers are asking for more. It helps establishing buyer/seller trust. 20% of Skype users user PayPal.

5:19 Yahoo! and Google partnership. Testing with Yahoo! in early 07 they'll test Google text ads.

Now Bob Swan is talking about financials.

5:20 Acquisitions and weaker dollar added to bottom line. EPS strength due to higher interest income, lower tax rate, higher revenue growth.

5:22 Bob lists growth numbers. They all sound impressive, especially new users and GMV.

5:23 Seller activity - in the US Store listings declined and make 77% of all listings. Fewer store closures than originally anticipated. It's hard to tell going forward as new fees came to effect in September 21.

5:24 Internationally - Europe - some slowdown but in some markets are impressive. Asia - progress in face of tough competition. Korea - growing (really?). China - maintaining share (says that with effort). Australia - standout performance.

5:26 Shopping.com was strong. Marketplace is in better shape.

5:27 PayPal - 127 million accounts. 41% revenue growth. They're happy about PayPal. High penetration rates also in N.America. PPV growth of 27%.

5:28 Transaction expense at PayPal was down (nice).

5:29 Fraud management capabilities improve.

5:30 20% increase q/q in Skype, over 120% y/y. Free SkypeOut promotions were responsible for Skype strong growth.

5:31 Now Bob is going down the P&L statement. I'll bring the exact numbers later, but seems they're doing well. 18% growth in operating income.

5:33 Excellent cash flow over $530 million in Q3. Free cash flow also increased. Share repurchase - 24 million shares at $67 million. $3.8 billion of cash on BS.

5:35 27-28 cents EPS for Q4. $1.01-1.02 FY.

5:36 Business becoming more seasonal. They will be able to know better about Skype by next Q to give better guidance for 2007.

5:38 Summary - happy with Q3 results. And it's question time.

5:39 JPMorgan - next year guidance includes Yahoo!? Bob answers - yes. Second question - Asia - partnership? Joint venture. Meg - healthy growth in listings and GMV. Believes eBay's maintaining share but feels pretty good about where they are. They charge very low fees in China. PayPal and eBay are very close there, like in Korea, so they're looking at that. 3rd q - SkypeMe buttons. Meg - indications are positive. Higher conversion rates when buttons are used.

5:42 Lehman analyst asked a question about Skype in 2007. Meg - she cautiously optimistic and will give better guidance at end of Q4. Bob jumps in and says they'll expand product offering.

5:44 Deceleration in listings. Meg says they're still seeing the effect of fee changes. And the ad campaign, is it the same time, same effect? Meg - yes. Re testing with Yahoo! - what's going on there? Meg - eBay and Yahoo! are working well together (got disconnected, back on). Contextual ads are positive and non-cannibalizing. Graphical ads in Motors and it looks good. Bob - couple more months of testing. They're going to be cautious the ads won't detract from shopping experience. Tests will run until January ? - yes. Skype - how would you monetize users? Meg - variety of incremental revenue streams. Will bring to market in first part of 2007.

5:49 Stifel Nikolaus: GMV growth - what drove it? eBay Express, shopping. com? Meg - rebalancing efforts had a disproportionate effect on that. Nothing in the quarter that was unique in these categories.

5:50 Morgan Stanley Mary Meeker - Skype growth, PayPal, Yahoo! breakdown for 2007. Bob - they weren't sure they should give 2007 guidance but wanted to be transparent. They will give more insight after holiday season. The want to get more insight themselves first.

Stock repurchase - how much of what you could do, you did. Bob - they were opportunistic about the repurchase, especially at today's level.

Meg - PayPal integration onto Yahoo! is very important for 2007

5:55 Anthony Noto, Goldman Sachs - who are the intended users for eBay express (missed the first part of question).

Bob - better operations after the quarter. Decent acceleration going forward.

Meg - eBay Express - the focus will be around getting eBay users.

Anthony - Pay per call. Meg - will see more in 2007.

5:58 Credit Suisse - more about the success of eBay Express. Meg - existing consumers seem to spend more on eBay Express rather than new users but too early to tell.

5:59 UBS about classified and fixed price. Meg - very satisfied with classified. Rolling out similar programs in classifieds. Fixed price - no target. They're going where buyer is taking them.

6:01 Justin Post Merrill Lynch - GMV growth, and Skype - revenue per user going forward. Meg - eBay is aspiring to grow faster than other ecommerce. Rebalancing marketplace and revitalize auction, advertising campaign. Re-accelerate GMV growth in largest markets. Re Skype - development of echosystem and growth of new active users are main points. Revenue per user isn't the focus for 2007 (why not?). Bob is adding about tailored shopping experience, they would look at new categories to expand that.

6:04 Mark Mahaney Citygroup - are you worried about mixed messages between eBay and eBay Express especially later with IT campaign. Meg - trying to introduce core users to Express. IT is the umbrella she is saying and laughing. It is important for people to understand the difference.

6:06 Missed who's asking but it's about China the first part, second about shopping.com. Meg - China - reiterating that they're seeing good GMV growth in a highly competitive market. We ARE committed to China in the long term (phew). Shopping.com is different than other ecommerce site - innovation is what is driving shopping.com great results.

eBay shares are up 61 cents in after hours trading, or 2.14% to $28.49.

And that was that!

Print this

Reader Comments (Page 5 of 10)

10-20-2006 @ 2:59AM

Christine said...

Geez, is someone proud of their portfolio or what?

I'm glad to hear someone's making money, it's certainly not ebay sellers!

I'm hoping you make lots of money as an investor, that's what you're in it for. As a seller, there is little to no money to be found in ebayland. No matter how they manipulate the numbers to make things look good, they have no choice but to project lower numbers for the coming quarters. Ebay knows the truth is working it's way out, and they have to say "Hey, next couple quarters may not look so good." See, that way the investors can feel better about things. The investors are the important things, right?

Well, seems to me it's sellers that are paying in the fees every month, and I think it might have been Business 101 where they explained that lack of sellers = lack of profit for ebay. But Gosh I keep forgetting it's investors who are most important!

In no way do I think sellers are most important. Granted, you have no sellers, you have no business. Nor do I feel investors are most important in this mix either, they're just people out to make money on someone else's work. Now BUYERS....I think buyers hold the highest importance level.

Ebay has unfortunately gained itself a reputation of being a wasteland of fraud, rip offs, and scams, and throw in some illegal items being auctioned for flavoring. Now for every person who ebay allows (and yes, I mean ALLOWS) to be scammed, that person is going to tell how many other people?

That is the true damage being done on ebay, and something that ebay will never recover from if they refuse to police their site. Sellers can keep listing in hopes of sales, investors can keep investing in hopes of making money, but buyers will simply shop somewhere else, and tell their friends while they're at it.

Ebay has grown into many different companies in hopes of expanding their empire, which I'm sure makes an investor very happy, as atleast some of these ventures will produce growth. But you know, they could have all the growth in the world IF THEY WOULD JUST CLEAN UP THEIR SITE!! The key to everything is right there in their CORE business: the business of auctions. Millions of people buying and selling on ebay has made ebay what it is, not ebay making the sellers, and therefore they are disposable! This would be ignorant thinking, from Every point of view.

But then again, we are talking about ebay, and ignorant thinking reins supreme! Meg's all about "getting back the magic", but somehow she doesn't see that ebay itself holds the key to bringing it back. It's damaging itself, a few thousand whiners with war stories could never do the damage to ebay that it's doing to itself.

I'm hoping against hope that ebay corrects it's mistakes, or it's not going to turn out well for anybody. And that includes the very proud investors.

Just one more thought...the bad thing about sauce is that it soaks into the pasta and slowly disappears. You make spaghetti one night and have gobs of sauce on it, and the next time you pull it out of the fridge, you find it's all soaked into the pasta and disappeared. I don't think I'd want to compare my investments with sauce, because sauce disappears.

I think it's a very naive investor who would place their bets on the Q3 2006 report. Glad it's not me!

10-20-2006 @ 4:10AM

Gary E. Sattler said...

Hey sigh!

Let us try a different angle here.

(forgive the stretching... it's my writing style)

I'm the ignorant novice. You are the world renound professor of investment worldiness. I have paid my year's wages to enter your esteemed tutorship sir.
Please answer my humble, dull and cumbersome questions as I clumsily place them before you.

Professor:

1.)What is your view and opinion of a company which activly seeks to dehumanize it's rank and file employees?

2.)What are the long term prospects of a corporation which openly scoffs at enforcable laws?

3.)Do class action lawsuits settled out of court preclude individuals not named in the original class from seeking relief for the same damages? Or do those settled class actions constitute precidence on which further tort actions can be based?

4.)Are false financial disclosures made verbally in public subject to the same statutory discipline as documentary filings which contain the same, similar or even different falsehoods? If so, can the simple contradictory nature of the two types of financial declarations be used to establish the crime of false swearing for purposes of prosecution?

5.)Can a corporation, while not committing criminal activities (per se) overtly, be held liable for knowingly creating and enhancing the mechanisms whereby those who are committing various crimes have greater access and ability to commit their crimes while providing an expected increase of income flow to the host?

6.)Can an employee of a major corporation be dismissed from their employ for submitting to a directive from federal authorities to channel data feed directly to those authorities? If so, do you think that employee would really give a damn if they were fired?

7.)Are stock certificates worth anything if you never sell them?

8.)Is it true that cell phone conversations are not protected by the Fourth Amendment?

9.)Can I buy you lunch and if so, would you please not put so much garlic on that sauce?

Something stinks around here.

..
~

10-20-2006 @ 10:29AM

sigh said...

Ebay Seller Anonymous Counselling Services

Payment Method: PayPal
After Hours Counselling: Skype
Special Chaise/Lounges and CDs: Ebay

Dr. Fraser Sigh: STREETCH and Pasta folks please all lie and relax on the super chaise/lounge . Gary please kindly leave your clothes on and shoes. Sorry it's not aroma therapy. Thank you.

Ok tell me your story.

STREETCH and PASTA: Dr. Sigh. we had this fabulous loving marriage with Ebay for 10 wonderful years. Every since it went public 6 yrs ago disturbing things started to happen. We raised the problems because our values of an open and honest relationship but IT always smiled and nodded and said no worries we will all work out.

We were making money so we continued to look the other way but nothing changed. We loved IT but we just couldn't let go. I mean where else would we go? IT was so Popular, Strong, Rich, Beautiful, Charismatic and IT even has moments of kindness. We had invested so much time and effort into this marriage.

Dr. Fraser Sigh: Mikey please give a Gary a little shake. Thank you. Continue.

STREETCH and PASTA: Then the abuse and lies started to mount in the last year. ITs behaviour was erractic. IT asked us to pay more for visiting IT's mansion. IT started to flirt with others which we hated. The lies were out of control

We had to face the moment of truth. IT fell madly in love and was whoring with millions of Richer INVESTORS and Friends. Some of us left and some still see IT. Alot of us are financially ruined. We can't sue for Alimoney because we signed a prenupt.

So now do you understand why we are heart broken, disenchanted, bitter, and angry?

GARY is hypnotically glowering and muttering to himself "Die Die EBAY", with his cherished Boy Scout pocket knife continously jabbing into my freaking leather leather chaisses/lounge!

10-20-2006 @ 12:52PM

Gary E. Sattler said...

I notice an interesting dynamic developing here on Blogging Stocks. Back on the discussion board called the Soap Box we recognized it as "thread pushing". When things were first getting hot in the revolution and the patriots were posting truth on the discussion board, trolls would come in and make a unified effort to "push down" the truth by posting nonsensical drivel unrelated to the facts at hand. The result was that the truth would be ineffectivly covered for a time.

If anyone cares to check, it apeears that Blogging Stocks has been "trolled".

10-20-2006 @ 12:59PM

Michele said...

Oh my, dear sigh, I do believe you are in the wrong business!!!

You could be a script writer for Hollywierd!!!

Bravisimo... Now can we stop referring to Gary as some Boy Scout trying to save the world? From what I have learned about him from following his posts, he is a Man, with a family who is most of the time right on with what is really going on at eBay...

Respect is earned... You may not care, but he has earned the respect of many sellers...

10-20-2006 @ 1:12PM

sigh said...

Ebay Seller Anonymous Counselling Services

Payment Method: PayPal
After Hours Counselling: Skype
Special Chaise/Lounges and CDs: Ebay

Session 4: STEETCH DRY PASTA Group Therapy

Dr. Fraser Sigh: This is a special one for you Gary. You have many friends who love ya Big guy :) No charge it's on the house. This is from an ole friend Barbara.

http://www.youtube.com/watch?v=NcZUJXvD-EA

10-20-2006 @ 2:05PM

Texas Trader said...

Sigh, #1...you made reference in your post back to mine that I'm a "fellow"...sorry, I'm a "fella"...(which is the feminine form of fellow, if you don't talk Texan).

Unfortunately, this blog has become a joke, between the "new dynamic duo"...

So, you two, you can make all the snide remarks you want but I think you should set up your own private blog so you can keep patting each other on the back telling yourselves how wonderful and knowledgeable and experienced and...what else...well, whatever it is y'all think you are.

I find myself getting onto the low road that I mentioned yesterday, but I can't help myself. If y'all were really here to share your expertise with the eBay sellers who have experienced serious income losses through eBay (and yes, I'm one of them), then I think your credibility with us would be outstanding.

As it is now, y'all are just wallowing in the mud you're slinging.

Good grief...

10-20-2006 @ 2:23PM

Lizzy said...

Wow - I hope Sigh knows that by watching YouTube, she/he/it is actually supporting GOOGLE, not eBay! eBay lost out on their attempt to snatch that one up too. While I didn't read every word of the last 80-something posts, sounds like the trolls talk of their Big Buck salaries which come from eBay-related business. Wow - good for you! I would wager you are one of the MANY sellers eBay loves, who offer their wares for one penny, and charge a small fortune for shipping, further reducing your expense to use the "venue", while costing all the legitimate sellers. Of course, I could be wrong. You might not be making any money at all, which is why you have the time to troll the boards.

Funny to watch the trolls resort to name-calling when the facts are stated clearly. It is so danged hard to argue with the truth and results.

It will be a roll of the dice to see what happens to eBay when Christmas is done. Those hanging on by their fingernails, hoping for a Christmas selling miracle (like, the search engines will work, or the BIN buttons are not broken, etc etc) will let go of their grasp. The thing is, they'll find that there are plenty of other venues which would welcome them with open arms.

eBay is a household name. But then, so is Earl Scheib, Enron and mold, and I don't want to mess with any of them. They are causing their own messes right now, but I guess as long as their paychecks clear the bank, the top brass are happy campers. Amazing how they seem to be banking on the hope that there will always be a new sucker who hasn't heard about the problems, doesn't realize stores are not wanted and the site is basically broken.

Too much money has been put into outside acquisitions, foreign sites and bandwidth wasters like MatchUps. Precious little time, effort or resources has gone into FIXING the broken parts of their flagship product - eBay.com.

While folks will mess with something for a little while, this is an up-to-the-minute, disposable society. There are just not that many people anymore who will wait around for them to get their act together and realize the broken parts need fixed. We'll just discard it and move on to something that does. How many fix-it shops do you know of nowadays? (Think Emmett from the Andy Griffith Show.) Probably not too many. Why? Because, thanks to cheap foreign imports and time shortages, we just don't mess with fixing the broken things we have anymore - we discard and buy a new one.

The same with shopping on eBay. It is SO broken now, few are going to stick around to try and make it work. Not many have the patience and fewer have the time to try and find something so buried that they have to dig through a load of imports from China, Hong Kong or Korea to find an item in the USA. Then they have to hope for one who will actually ship the item they pay for.

eBay has begun digging its own grave with the latest policy changes, fee hikes, Gestapo tactics on the boards and generally offending the majority of the small business owners who used them.

Are you listening, Bidville, HiBigger, Wagglepop, Yahoo and every other venue out there? This is your moment - this is where you can get close enough to the giant to sling your rock and knock him down. Step up your game. Make sure your sites work well, provide quick customer service and ADVERTISE, for pete's sake! The only place other than eBay I ever see advertise is Overstock, and I won't shop there. (Talk about an annoying site to navigate! Ugh!) Recycle some cans, sell some old clothes, do SOMEthing to get some advertising bucks and get your name out there - PLEASE! Tell the buyers you exist!

I wish everyone who attempts to sell on line well. This will be an interesting holiday season, for sure. I know that we are no longer counting on eBay for anything but a let-down. Our store is scheduled to close within the next three weeks (we are moving inventory daily to our own site now). What a shame eBay chose to bite the very hand that has fed them all these years!

10-20-2006 @ 2:22PM

sigh said...

Ebay Seller Anonymous Counselling Services

Payment Method: PayPal
After Hours Counselling: Skype
Special Chaise/Lounges and CDs: Ebay

Session #5: Therapy Souther Bush STREETCH LITE PASTA Belles

Dr. Fraser Sigh: Hee hawww yall. How ya doin southern Texas Trader belle? This one is for you from both Ann and I. Sorry we have to charge ya. From our ole friend Elvis

http://www.youtube.com/watch?v=a0NMAQGpIZU

10-20-2006 @ 2:28PM

Lizzy said...

Who moved my keyboard around?

How about HiBiDDER? LOL! Sorry about that...
but the point is still there. Plenty of other venues exist, and the buyers will go where their favorite sellers go.

New business will come if/when they can FIND your products.

10-20-2006 @ 2:41PM

sigh said...

Ebay Seller Anonymous Counselling Services

Payment Method: PayPal
After Hours Counselling: Skype
Special Chaise/Lounges and CDs: Ebay
Session #7: Dizzy Lizzy Therapy

Dr. Fraser Sigh: This a golden 80s just for you Dizzy Lizzy and the gang ..Shout shout

http://www.youtube.com/watch?v=jGebunz-KT4

10-20-2006 @ 5:27PM

Michele said...

You are very condescending... I have never seen an investor spend time on a board being "funny" and handing out "therapy" that is not appreciated nor asked for...

Very odd... Makes one wonder what/who you really are...

I thought comments were supposed to be relevant to the topic...

You seem way off base... Melly?

10-20-2006 @ 5:42PM

Karen Walker said...

Sigh,
You are "such" an expert...and your credentials are.............? Arrogant, supercilious, self-aggrandizement really fails to impress. Meg and Bill do it SO much better!

10-20-2006 @ 6:13PM

Ann lambert said...

This is one blog that has to be patented for a S.N.L
Episode.
Sigh should enjoy the last laugh for putting up with all the pi22ing at EBay over the fees hike.

What a beautiful end for EBay’s and it’s MOAT.

10-20-2006 @ 7:50PM

Michele said...

"Sigh should enjoy the last laugh for putting up with all the pi22ing at EBay over the fees hike."

Huh? Putting up with what? Sigh chooses to be here as do the rest of us... Open dialogue, even amongst opposing sides or interests can be beneficial to all...

And please do your research, Ann, this is NOT about fee hikes... I presented a list to get you started if you really care a few posts back... The latest fee hike was just the last straw...

And please don't think you two are the only ones with money invested in eBay; many sellers are stockholders... Be careful who you're dissing *wink*; might be a co-investor... Oh wait, you want the stocks to go low so you can buy buy buy and hope eBay doesn't implode on itself come next Spring...

You two are a side show all your own... Maybe your add to the fray could be on SNL, the rest of us aren't laughing...

Hey, maybe you're the same person!
Now, THAT makes sense :)

At any rate, you should be thanking sellers for talking with you at all... You may put up a front here, but if have done any research with what has been presented to you, you know we're right... And you know that means eBay could crash and burn... Kind of like the hand it's dealt many sellers...

Have a lovely day, and my advice is free... no sauce...

10-20-2006 @ 8:33PM

Ann lambert said...

“If you have done any research with what has been presented to you, you know we're right... And you know that means eBay could crash and burn.”

Michele
Interesting reasoning powers for the pleasure of indulging in a well-crafted illusion that fits neatly into your brain's preprogrammed mindset of illusions.

Folks, we have another Norma Rea on board.

10-20-2006 @ 8:39PM

Mike said...

Hey Ann, I'm back at the law library now...for another 2 hours or so. And I'm still waiting....

10-20-2006 @ 8:42PM

Mike said...

Come and get me.

10-20-2006 @ 8:47PM

Texas Trader said...

Amazing...absolutely amazing...Ann, you are right...this should be grabbed up by S.N.L. - or maybe Jerry Springer.

Okay, my friends, I'm back on the high road...I see the new dynamic duo just getting mean....and just like the trolls on eBay, they're here to puff up and try and get us riled up. I truly don't believe a serious investor in eBay would be spending this kind of time on an internet blog, so once again, let's do like we do on the other site...just ignore 'em. They'll only have each other to talk to...now THAT would definitey be material for the comedy channel.

100

10-20-2006 @ 8:48PM