Serious product relaunch expected in fall by eBay

EBay Inc's (NASDAQ: EBAY) announcement of another quarter of weak core listings, particularly in the United States and Germany, is leading to a new launch of the auction leader's webpage in the fall.

However, despite the need to reorganize its weak core product and get listings growing again, eBay continues to grow revenue, earnings and, especially, free cash flow. Better conversion rates and higher average selling prices (ASPs) are offsetting the weakness in listings.

This ability for eBay to grow these important metrics during a product transition demonstrates how powerful its platform is. Generating advertising revenue is another source of big revenue generation that is very much in its early stages of growth.

Paypal continues to be an outstanding business and a big contributor to cash generation. Skype, however, is beginning to roll over as activations are below target. While demonstrating strong initial growth, new initiatives need to be put in place to get this business model where it needs to be.

Meg Whitman, eBay's CEO, said the company is a social commerce business targeting people's innate desire to connect. It appears eBay has to improve its platform, but in the interim, it continues to grow ASPs and conversions. Not too many companies have had the ability to do that over time.