The legal team at eBay (NASDAQ: EBAY) has been working harder than Mystic Tan guy at Angelo Mozilo's favorite salon.
First, Tiffany (NYSE: TIF) sued the company over counterfeit merchandise appearing on the auction site. Then, eBay sued Craigslist, Craigslist sued eBay, and many legal fees were spent by all. Now, eBay and its StubHub subsidiary have attracted the scorn of Chicago, which is suing the company for failing to collect the 8% amusement tax the city charges on ticket sales, including resales. Heaven forbid anyone in Chicago have fun without forking 8% over to the city. eBay says the 8% sales tax doesn't apply to it.
Chicago's city government joins Texas and New York in looking to crack down on e-commerce sites that don't collect sales tax.
It's unclear to me why the 8% amusement tax should apply to the resale of tickets online -- the tax has already been collected on that ticket, hasn't it? But bureaucrats have an infinite number of ways to make money, and that requires an ever-growing pile of money to waste. It'll be a victory for consumers if eBay emerges victorious in this battle.
Everyone's favorite Pearl Jam foe, Ticketmaster, is targeting the competition by merely absorbing it. The subsidiary of IAC/InterActive (NASDAQ: IACI) is scooping up TicketsNow Inc. for about $265 million. TicketsNow, which sold $202 million worth of tickets in 2006, is currently the country's second-largest reseller of tickets for concerts and sporting events. Number one in the resale business (a market with an overall estimated annual value of $2.5 billion to $5 billion in the U.S.) is StubHub - a division of eBay (NASDAQ: EBAY).
Many of the sellers on StubHub, TicketsNow, and other sites procure their tickets originally from Ticketmaster, but Ticketmaster currently misses out on any profit gleaned from a resale. The Wall Street Journal notes that "Where resellers once were viewed as shady scalpers, now, thanks largely to the Internet, they are becoming more respectable."
TicketsNow, according to the article, is primarily a tool for professional ticket brokers, who acquire tickets from Ticketmaster and other sources and then sell to customers. The site currently charges buyers 15% on top of the sale price, and charges variable sellers' fees depending on sales volume and additional factors. Hopefully, with the two ticket names in cahoots, it doesn't essentially mean that Ticketmaster will be earning twice from the sale of a single ticket. But as the Journal points out, "The acquisition raises potentially thorny questions for TIcketmaster..."
It's been a busy year for Ticketmaster in the news ... this deal comes after concert promoter LiveNation vowed to sever ties with Ticketmaster but ahead of a planned spin-off of Ticketmaster into its own publicly traded entity.
I seriously enjoy reading Ina Steiner. She's the editor of AuctionBytes.com. I like her stuff because she's just so damn objective. She simply lays out the facts and lets you come to your own conclusions. I also like Ina because she continuously holds a very bright light directly at eBay (NASDAQ: EBAY).
Recently, Ina opened the floor at the AuctionBytes blog for discussion about the involvement of Meg Whitman in the Mitt Romney campaign. Needless to say, the situation has raised some eyebrows. Personally, I don't care what direction either Meg or Mitt choose to go. Ina's readers, however, had a very dim view of the situation. My question is, has Meg's insurgence into the political realm affected the shareholders of eBay?
Forget for a moment all the ill conceived plans that eBay has tripped over. Ignore the Skype debacle, the eBay China crash, the silencing of Stubhub and the host of other demons that in my opinion the Whitman crew has set loose, buried or denied. Forget for a moment about all that cash flowing into eBay coffers with nothing better accomplished than to outsource customer service and to pay Whitman's salary. Ignore the wolf at the door in the form of Amazon Inc.(NASDAQ: AMZN). Never mind that eBay has lost its shine and reputation and is yet to pay a dividend to its shareholders. I'm talking about presidential politics and corporate wrangling here.
Any savvy eBay (NASDAQ: EBAY) seller will tell you that oftentimes items sell better together. For instance, a set of 1959 Topps baseball cards would likely fetch more than the individual cards.
But other times, especially in the case of items that aren't really related, you'll get more listing them separately. For instance, The Backstreet Boys new CD probably wouldn't sell well packaged with Kurt Cobain's Journals.
Given the wide variety of business that eBay now has under its umbrella -- Skype, PayPal. StubHub, and others -- some are suggesting that it might be time for eBay to split itself up, or at least divest a few non-core assets. According to The Wall Street Journal [subscription]:
So why aren't investors giving eBay proper credit? Ms. Whitman's big $3.1 billion purchase of Skype and subsequent need to write-down that business's value left a lingering impression that she is an empire builder. One way to show that isn't the case would be to push some of eBay's businesses out of the tent.
PayPal might find independence handy. Rivals Amazon or Google might reconsider their aversion to using Paypal's services if it wasn't run by a competitor. Spinning it off or selling a stake in a public offering also might reduce the conglomerate discount attached to eBay. Selling may not be as fun as shopping, but it usually is more lucrative.
But The Journal already summed up the problem: All the indications would seem to be that Meg Whitman is an empire-builder, making any strategic changes unlikely without outside pressure.
If you back out the painful losses from its ill-advised Skype purchase, eBay posted some pretty impressive earnings numbers today for the 3rd quarter of 2007. EPS of $.41 well exceeded the market expectations of $.33 on an operating income of $593 million and net revenues of $1.89 billion, an increase over same quarter of '06 of 30%. The company also purchased back almost 15 million shares during the quarter.
With the Skype fallout included, however, the picture was less rosy. GAAP operating income was in the red by $938 million, for a loss of 69 cents. However, the company told the Wall Street Journal (subscription) that that it does not anticipate having any future charges related to Skype to sully future earnings reports.
eBay credits strong performance by its PayPal program, StubHub, and advertising businesses for the stronger than expected performance. The market responded with a late surge, driving the stock up to close at $40.60, an increase of 5.18% for the day.
With a Harvard degree and an MBA from Stanford, Eric Baker took a common route; that is, he got a job in the private equity space (for Bain Capital). It was certainly a useful experience -- as he learned about tech, as well as leveraged buyouts.
But he got the entrepreneurial itch and put together a startup: StubHub. The goal was to make a market -- using online systems -- in secondary ticketing.
And, yes, things went very well and the company eventually sold out to eBay Inc. (NASDAQ: EBAY) for about $300 million.
Interestingly enough, Baker is far from finished. His latest gig is Viagogo, which is similar to StubHub. However, the company is based in the UK and is finding lots of opportunity in European markets.
As testament to its success, Viagogo has announced that it has snagged $30 million in capital (in all, the company has raised $50 million). One of the investors is Index Ventures. Others include the chairman of LVMH, media mogul Herbert Kloibel, and Jacob Rothschild.
Actually, Baker had a dispute with his partner at StubHub and, as a result, started Viagogo several years ago.
Ironically, Baker is now focused on the US market and will likely make life tough for StubHub. And, by the way, he still owned roughly 10% of StubHub when it sold out to eBay.
To check out more recent venture capital deals, click here.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
New York Governor Eliot Spitzer signed a bill last week eliminating state-imposed price restriction on reselling event tickets, effectively legalizing scalping. More and more states have been repealing anti-scalping laws in recent years, paving the way for companies like eBay Inc. (NASDAQ: EBAY) subsidiary StubHub to create a market for the resale of tickets.
As "deregulation" of scalping continues, StubHub and similar companies should prosper. It's hard to understand why it's taken so long for so many states to eliminate these antiquated laws. According to the Boston Globe, "The justification for anti-scalping laws has been the desire to prevent fans from paying exorbitant amounts for tickets."
But if someone wants to pay $5,000 for a ticket to see the Rolling Stones, why would the government interfere? Who exactly is being protected when the state tells a guy who wants to buy a ticket from someone who wants to sell it that he's not allowed to see the concert.
There's really no economics-based justification for anti-scalping laws. It appears to be a reaction to the unsavory perception of the business, but I can think of plenty of other unsavory industries that are perfectly legal. Now I'm going to go look at my cell phone bill and try to figure out why it's so high.
What is eBay Inc. (NASDAQ: EBAY) these days? Sure, most of us think that eBay is an online auction giant where anyone and everyone can go to buy and sell new and used goods. That's a pretty general way to describe eBay's business these days, but there's more to the company than that -- and some investors are taking notice. The thing is, they don't know what eBay is trying to become.
eBay's purchase of PayPal five years ago for $1.5 billion was arguably its smartest acquisition. Almost all eBay auctions I see these days provide the option to pay using PayPal, and I see more and more non-eBay merchants accepting PayPal as a payment method. Each time a transaction goes through, eBay collects a fee. I'm quite sure that PayPal fees collected by eBay up to now have surpassed the $1.5 billion purchase price. eBay's Skype acquisition from a few years ago, however, is another matter.
Is eBay planning on becoming a telecommunications provider now? Skype is a product I use and find immensely helpful. In fact, us Vonage types have shunned costly landline phones for technological alternatives, and Skype has quite a large worldwide subscriber base. Will eBay continue to operate as a minor (or major) influence on telecommunications? Probably so. Additionally, its StubHub purchase makes sense, as eBay wants to make a cut on event tickets (concerts, sporting events). No big surprise there. But with all these varied businesses, eBay's becoming more and more of an enigma, according to BusinessWeek.
Will the online auctioneer operate these brands as separate businesses and aim for profitability in each one? It's already done that with PayPal, and someday (hopefully), the Skype purchase will pay for itself. If eBay acquires social networking site StumbleUpon, it will be another seemingly-disconnected business that makes eBay look like a bizarre bazaar within its corporate identity. Maybe that is what it wants.
Bill Martin – well-known for his role as founder of the Raging Bull website – now shares his trading and investment advice in his always-intriguing FindProfit newsletter.
And while noting that his latest buy "strays a bit from our usual small-to mid-cap focus," he is nevertheless willing to "step up and buy web giant eBay (NASDAQ: EBAY)."
After watching EBAY for years, he says, "we believe that the stock now represents an attractive purchase for long-term investors."
Ne notes that the stock began underperforming in 2005 as growth in its core marketplace business slowed and Google gained operating steam. Meanwhile, he says, the stock is now over 20% below its 52-week high and equal to the levels it traded at in early 2004.
In his view, EBAY is now an "attractive growth at a reasonable price stock." He forecasts that the company should generate nearly $2 billion in free cash flow in 2007 despite, he notes, high levels of capital expenditures.
The advisor notes, "To us, EBAY increasingly looks like the kind of high-class company that Warren Buffett loves: it has a strong brand and franchise, it generates substantial returns on equity, it is positioned to grow for as far as the eye can see, and it is in a position to reinvest its cash flows at high rates of return."
Selling tickets online is nothing new. I remember visiting one of the early companies back in 1997 called Tickets.com.
Well, it seems that the space is heating up again, especially in light of eBay's $310 million purchase of StubHub.
Venture capitalists (VCs) are paying attention and are revving up deals. The latest: a $34 million investment in TicketsNow. The lead investor is Adams Street Partners.
The company focuses on selling premium event seating. According to the website: "We go to great lengths to make sure that the products we sell are authentic and the services we offer are beyond reproach. TicketsNow.com enforces the industry's most stringent rules for listing tickets on our site, yet we still are able to offer you the largest selection." Then again, the company works only with licensed brokers.
Moreover, TicketsNow crossed over $200 million in revenues last year and is continuing to grow at a hefty rate.
With the IPO market becoming more receptive to tech deals, it's a good bet the company is thinking of a public offering.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
Things weren't that pretty over at eBay Inc. (NASDAQ:EBAY) in previous quarters as eBay stock declined 34% in the past year taking it to a low of $22.83 in August. Last quarter, however, eBay charmed the Street when it reported third-quarter financial results. Even Cramer did a backflip and considers eBay a value Internet stock. The stock climbed from its August low to hover around $30 lately.
For fiscal 2006 fourth quarter, consensus analyst estimate calls for earnings of 28 cents per share, in line with the company's guidance, and up from 20 cents last year. eBay gave revenue guidance for Q4 2006 to be in the range of $1.615 billion to $1.675 billion. According to Thomson, analysts call for a 25% growth in sales to $1.67 billion.
eBay will be reporting Wednesday January 24th after the close, and I'll liveblog the webcast beginning 2 p.m. Pacific, 5 p.m. Eastern. It will be interesting to see how eBay does. Here's what analysts (and I) expect to hear:
It's been a couple of days and it's time to see how the Street reacted to eBay Inc.'s (NASDAQ:EBAY) recent purchase of StubHub Inc.
Before the purchase, when the announcement wasn't official yet, I said that this acquisition is a good one, taking care of competition and giving eBay a bigger market share of the ticket reselling business.
First, eBay share gained back 3.17% of their value yesterday, as investors obviously reacted positively. What about analysts?
Mary Meeker of Morgan Stanley expects the purchase to reaccelerate growth for the company. Meeker has an "Outperform" rating on EBAY and expects StubHub to help eBay's struggling tickets category whose growth dropped to 19% in the fourth quarter of 2006 from 31% a year earlier.
Robert S. Peck of Bear Stearns even thinks that with StubHub, eBay could become a "formidable competitor" to the largest online ticketing platform, Ticketmaster and its TicketExchange. Ticketmaster is owned by IAC/InterActiveCorp. (NASDAQ:IACI).
Jeetil Patel of Deutsche Bank who has a Hold rating on EBAY warns that the core business continues to struggle. He is more cautious.
Douglas Anmuth of Lehman Brothers believes the acquisition is a good fit strategically.
Justin Post of Merrill Lynch thinks that with StubHub, eBay will probably control 40% of the secondary ticket market.
So there you have it. While ticketing is a relatively small business for eBay overall, I think investors were simply happy to see a good and positive move on part of the company.
Rumors have been floating on for a while and today we are informed -- again -- that eBay Inc. (NASDAQ:EBAY) is on the verge of buying StubHub Inc. for some $300 million in cash. That's according to sources.
BloggingStock's Gary E. Sattler wrote about StubHub back in November, giving a little more in-depth look into the online ticket reseller. The company boasted a 3000% growth rate from 2002 to 2005 and was mentioned among the 10 fastest growing private companies in America on Inc. Magazine's annual "Inc. 500" list.
The official announcement could come tonight or tomorrow according to sources that AP and Reuters quote.
Ticket sales on StubHub were more than $400 million in 2006, generating more than $100 million in revenue. Sellers pay a 15% fee while the buyers are charged a 10% commission.
This isn't the first time eBay is trying to buy StubHub. In 2002 the price tag was $20 million, but negotiations fell apart.
With the U.S. secondary ticket market having a turnover of about $10 billion a year, eBay is wise to buy out the competition to get a bigger piece of the pie.
eBay shares closed at $29.30 today, down $0.45 or 1.51%.
With the assortment of Web 2.0 companies popping up left and right these days, leave it to the larger, established web properties like eBay Inc. (NASDAQ:EBAY), Yahoo! Inc. (NASDAQ:YHOO) and Google to add to their existing product portfolios by means of acquisitions rather than organic growth.
Nothing to see here -- this is the common way to grow, as long as you don't spend too much money in the process. With recent rumors like Yahoo! spending $1 billion for FaceBook.com (still a rumor) and eBay's $3+ billion purchase of online voice communications provider Skype years ago, who are the folks doing ROI analysis on these purchases?
With so much in flux still these days, it's probably hard to project even five years into the future when calculating the payback on an acquisition. Social networking and voice-over-internet-protocol (VoIP) are great recent trends that show no sign of ever going away -- but that's what many smart businesspeople thought of the thousands of dot-com companies over six years ago. We all know what happened then.
With deals in the area of hundreds of millions and even billions, some of this talk sounds like dot-com redux. I'm still scratching my head over eBay's Skype purchase, and whether it was really worth the $2.6 billion pricetag.
Yahoo!'s rumored Facebook purchase is a little wary as well, although MySpace.com has shown that social media is a hot topic (but a long-term topic?). If eBay buys online ticket marketplace StubHub for the rumored $300 million, the company better have a well thought-out and defined business plan for a purchase of that size. If I was an eBay shareholder, I would demand this -- it's your money being spent, you know.
The legal team at eBay (NASDAQ: EBAY) has been working harder than Mystic Tan guy at Angelo Mozilo's favorite salon.
I seriously enjoy reading Ina Steiner. She's the editor of AuctionBytes.com. I like her stuff because she's just so damn objective. She simply lays out the facts and lets you come to your own conclusions. I also like Ina because she continuously holds a very bright light directly at 
Any savvy 
If you back out the painful losses from its ill-advised Skype purchase, eBay 
With a Harvard degree and an MBA from Stanford, Eric Baker took a common route; that is, he got a job in the private equity space (for Bain Capital). It was certainly a useful experience -- as he learned about tech, as well as leveraged buyouts.
What is 
With the assortment of Web 2.0 companies popping up left and right these days, leave it to the larger, established web properties like eBay Inc. (NASDAQ:EBAY), Yahoo! Inc. (NASDAQ:YHOO) and Google to add to their existing product portfolios by means of acquisitions rather than organic growth. 
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Closing Bell: Torch Passing on a Friday Rally
