This past holiday weekend my colleague Doug McIntyre gave support to a blog I wrote in May 2007 when he posted Google (GOOG): The Failure Of YouTube. In my rant I gave a detailed analysis outlining how Google had overpaid for YouTube by a fantastic amount.
In the story Doug quotes projections that 2008 revenue generated by Google might gross $200 million from YouTube. That's revenue, not profit. A 20% profit would be $40 million if that was possible. In the article I wrote: How can I say Google overpaid for YouTube? I stated the case in plain English why the YouTube investment would have to earn $300 million (net, not gross) minimum, in its first year not to be dillutive.
They missed the target by a mile. They will continue to miss the target and I do not expect it to ever justify the cost. Just because Google has lots of cash slushing around does not mean they have money to waste.
While business partners eBay (NASDAQ: EBAY) and Craigslist are busy duking it out over lord knows what, Wal-Mart (NYSE: WMT) is quietly making a surprising move into the online classifieds business.
The retailer recently revealed its own online classified ad site in partnership with Oodle.com -- check it out here. According to the Wall Street Journal, the site is a pilot test with 30 million items, and financial terms of the arrangement have not been disclosed.
This raises an important question: how is the site different from Craigslist? Glad you asked: it isn't really, but it's a cleaner set-up, although Craigslist's minimalist design appears to be quite popular. Wal-Mart Classified is also really just an aggregator of ads from from tons of other sites -- nothing unique at all. The question is whether college students and recent grads (a key Craigslist market) looking for furniture or apartment rentals will really want to log-on to walmart.com to do it -- I'm skeptical.
According to a BBC report, It appears that life at Craigslist has become even more interesting. As you may know, Craigslist has been embroiled in a legal tussle with Internet giant eBay Inc. (NASDAQ: EBAY). After purchasing a 28.4% stake in the company over a year ago, eBay now claims that Craigslist's founder Craig Newmark and its chief executive Jim Buckmaster have done things to disadvantage eBay's stake in the company. The BBC report didn't specify exactly what eBay claims Craiglist officials have done to "dilute" eBay's interests. Craigslist has now filed a counter suit against eBay, alleging illegal competition. You can get more information on eBay's original lawsuit here.
The BBC report states: "The lawsuit demands that eBay restore all shares of Craigslist owned by eBay or for the court to require eBay to divest its holdings in Craigslist." This demand is apparently supported by the premise that after acquiring its stake in Craigslist, eBay gleaned operating information from that company and then used it to launch Kijiji. Craigslist also insists that eBay, "[...] violated [Craigslist] trademarks and used misleading advertising on Google to run ads for its rival Kijiji site."
What a pretty picture of corporate raiding we have here. I think the outcome of this legal battle shall be dictated by two particular things. First, Craigslist will need to provide a first class package of documentation to support its legal counter claims. Second, it wouldn't hurt if it could find a judge who has been ripped off using eBay...
Back in April, eBay (NASDAQ: EBAY), which owns 28.4% of Craiglist, sued the company alleging that its board of directors (which consists only of founder Craig Newmark and CEO Jim Buckmaster) had attempted to dilute eBay's stake to just 10%.
Well, Craigslist wasn't having any of that. It filed a lawsuit accusing the company of interfering with its business operations, unfair competition by using its proprietary information, and infringing its trademark to attract visitors to eBay Web sites. The suit was filed yesterday in California Superior Court in San Francisco.
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Something new and something old, eBay (NASDAQ: EBAY) the large Internet trading platform competes more each day with Craigslist, who's platform continues to unfold. They are very much the same, and oh so different, too. Craigslist has been resisting becoming eBay in too many ways, yet eBay has gone through the back door to acquiring partial ownership and tracking a competitive threat from the inside.
Being public, eBay must disclose its financial information, which is not true for the private Craigslist. Craigslist is not happy about eBay's ownership position, and for its part eBay has sued Craigslist. It says the board diluted its interest in the popular site by more than 10%, and the two have been trading accusations since.
For most of Craigslist's history there has been pressure to become public or sell itself outright or make the pursuit of profit a higher motive. That has been shunned in favor of slowly building a user friendly and practical Internet information trading platform.
The lawsuit between Ebay (NASDAQ:EBAY) and Craigslist is just beginning and its genesis has finally come out.
The issue between the companies began when Ebay brought its classified business Kijiji into the US market a little less than a year ago. Craigslist viewed this as triggering an anti-competitive clause with Ebay, one of the online classified site's shareholders.
According toThe Wall Street Journal's story on the lawsuit, "Craigslist directors held clandestine meetings in October 2007 to dilute eBay's minority stake in the online-classifieds company after eBay developed a rival offering."
It turns out that Ebay had also made an offer to buy all of Craigslist.
The merit in the lawsuit would appear to be with Craigslist. It is hard to imagine that it would stand by and let a large shareholder set up a direct competitor. It is harder to imagine why Ebay would file suit over the effort by Craigslist to protect itself.
The law may be on Ebay's side, to some extent. Craigslist did have a board meeting and set-up provisions to keep Ebay from taking a more active role. But, the morality of the situation favors Craigslist. Ebay's attempt to set up a competing business violated the "spirit" of the relationship between the two companies.
Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.
Craigslist is certainly a funky company. In light of its huge traffic numbers, it could easily post huge profits. Or, it could sell out for a big payday or even go public. Yet, such things seem to be anathema to the company – at least to its founder, Craig Newmark.
And now there's a big issue with eBay (NASDAQ: EBAY), which owns 28.4% of Craiglist. Apparently, the relationship has been somewhat rocky as is evident by the lawsuit announced last night. eBay is claiming that the board of Craigslist (which consists only of Newmark and the CEO, Jim Buckmaster) has attempted to water down the ownership position – to a mere 10%.
I can certainly understand Craigslist's actions. After all, eBay has its own classifieds service called Kijiji. But hey, in the tech world, such arrangements are nothing new. It's to be expected (and so are lawsuits).
Interestingly enough, Newmark is not being shy about things and has responded via his blog. According to him, the lawsuit is a surprise and he claims that eBay has "ulterior motives," which may involve a hostile takeover.
Really? Let's see, how many times has eBay launched a hostile deal? I can't remember. Plus, such a thing is nearly impossible for a minority shareholder to pull off (and, even more difficult if the ownership position has been heavily diluted).
Unfortunately, eBay's legal complaint was not disclosed (because of confidentiality reasons), but the venue is Delaware, which has lots of expertise in shareholder disputes and usually handles things fairly quickly. Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.
Online auction company eBay (NASDAQ:EBAY) owns just over 28% of classifieds company craigslist. eBay bought in during 2004.
Now, eBay is suing craigslist and its management for diluting its share in craigslist, something it contends the classifieds company can not do. "The recent actions by the craigslist directors have disadvantaged eBay and its investment in Craigslist," Michael Jacobson, eBay's senior vice president and general counsel according toThe New York Times.
All of this is a great mystery. eBay has not said what it paid for its stake. It has also not disclosed why it thinks craigslist has taken actions to cause dilution.
Why did eBay disclose the lawsuit but insist that its details be sealed? Craigslist is a private company, so there was no need to let the public know about the move.
One of several things might be happening. eBay has no control over craigslist management. Craigslist is one of the largest websites on the internet. eBay might want more of a say in how the company is operated and how it makes money. Many listings on craigslist are free. eBay may believe it will never make money on its investment if craigslist does not become more aggressive in its pricing.
The other possible motive is that eBay may want to try to force craigslist into a sale, with eBay being the acquirer. The auction firm needs something to jump-start its US business. A judgment against the classified company, especially if it includes any money damages, might open the door for eBay to move in.
The clock is ticking on JDate. No, I am not talking about the biological clock of millions of single women who are positive that their lives will be over if they can't find Mister Right before they turn 30. JDate's problems are of the business variety.
Spark Networks Inc. (AMEX: LOV), the parent of JDate and countless other singles sites, is a vestige of the early days of the Internet. Heck, I bet half of the computers sold during the late 1990s were to single people looking for their cyber soul mate. That's why I got online, and sure enough after gazillions of bad dates I met my wife. Even then, JDate was an expensive service. I met my wife on AOL's personal site which was free at the time. The competition for the online dater has gotten even more intense since then which is why I found the report in the New York Times that Spark Networks was looking for a buyer not surprising.
Online dating services are a dime a dozen. They are fairly cheap to set up and maintain. Moreover, social networks including News Corp.'s (NYSE: NWS) MySpace, reportedly one of Spark's suitors, and Facebook offer fairly easy ways to meet members of the opposite (or same sex) as does craigslist. Barry Diller's IAC/InterActiveCorp (NASDAQ: IACI) may be interested in Spark to help its Chemistry.com service compete more effectively against eHarmony.
While I am sure that these companies would eagerly snap up Spark at the right price, investors may be ones who wind up with the broken hearts.
As a dog lover, I have to say that this is one of the most evil scams I've seen in a long time. According to The Consumerist, the latest advance-fee scam works like this:
You're browsing through an online classified ads site like Craigslist, and see a cute little dog available for adoption. You email the poster who replies that there is no fee and that while he hates to see the dog go, the weather in Africa is no good for him. If you could just pay the shipping fee, he'll be happy to send you the dog -- and so you wire him the shipping fee and, you guessed it, never hear from him again. In some cases, he may string you along with more requests for money but, either way, you ain't gettin' the pooch.
These con-artists should have to share a jail cell with Michael Vick.
A self-described "spectacularly beautiful" 25-year old woman is drawing some flack for an ad she placed on Craigslist looking for a man earning at least half-a-million per year because "$250,000 won't get me to Central Park West."
Today's New York Timesfollows the story of the ad's provenance and the scandal that it has stirred. But being the helpful type, I am going to provide this damsel in distress (assuming it wasn't a prank) with some ideas on how to find the man of her avaricious dreams.
Money's Marlys Harris caused quite a stir a few months back when he published a piece called How to Marry a Billionaire. To infiltrate the world of the super-rich, you must be attractive, classy, cultured and have the right job: rich people, almost by definition, work extremely hard, and frequently meet their future spouses at work.
By making yourself the type of person who will be attractive to a billionaire, you are likely to make yourself the type of person would be attractive to anyone.
eBay (NASDAQ: EBAY) is opening a free classified website, not unlike the services offered by Craigslist. The site, called Kijiji has been available overseas. It will now be set up to operate in 220 cities and all 50 states in the U.S. according to The Wall Street Journal. The auction company is vague about how the property will eventually make money.
The new classified site is not good news for newspaper companies like The New York Times (NYSE: NYT) and Journal Register (NYSE: JRC). Shares in these firms have already dropped by as much as half over the last two years as advertising has moved from print to the internet. The availability of auto, real estate, and job classifieds online has been particularly damaging. Most sites like Realtor.com and Monster (NASDAQ: MNST) charge for their services.
The presence of a large, free classified website may pull dollars from some paid online sites, but the companies that cannot afford any more attrition are the ones that still have to support a large editorial staff and printing operations.
The "Power of 3" is what CEO Meg Whitman calls eBay Inc's (NASDAQ: EBAY) three primary businesses -- marketplaces, payments and communications. Any way you slice it, the "Power of 3" is working.
For 2006, $6 billion in revenue, up 31%
Purchased $1.0 billion in stock and upping it to $2.0 billion -- eBay had never repurchased stock prior to July 2006
eBay has 220 million users and Skype is now up to 171 million users, both growing nicely
Other names that eBay owns, has an interest in or relationships with are doing well, such as Shopping.com, Craigslist and VeriSign
Of the many positives for eBay, the most important one is that growth is now re-accelerating, which will drive the stock higher. Historically, large growth companies perform best when the growth rate picks up. The company is guiding to 18% to 21% growth for 1Q07, which appears too conservative.
I wouldn't over-think this one, just buy it and put it away.
If a company such as Craigslist existed during the 1950s, it certainly would have been classified as a communist threat. That is, why doesn't this company want to do what companies are supposed to do – maximize profits? Hey, even the "don't do evil" people at Google Inc. (NASDAQ:GOOG) are pretty good at making money.
Well, this week, the CEO of Craigslist, Jim Buckmaster, gave a talk at the UBS Global Media and Communications conference. His message was clear: the company listens to its users.
For example, the company could easily make a fortune from text ads. However, since users have not requested such things, Craigslist won't do it (how's that for a simple corporate philosophy?).
This past holiday weekend my colleague Doug McIntyre gave support to a blog I wrote in May 2007 when he posted Google (GOOG): The Failure Of YouTube. In my rant I gave a detailed analysis outlining how Google had overpaid for YouTube by a fantastic amount.
Back in April, 
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The clock is ticking on 
As a dog lover, I have to say that this is one of the most evil scams I've seen in a long time. According to The Consumerist, .gif){kind=logo}
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