Wednesday, May 14, 2008

eBay (NASDAQ:EBAY): Removed from Top Picks list at Piper Jaffray

Piper Jaffray is removing eBay (NASDAQ:EBAY) from their Top Internet Picks list and lowering tgt to $38 from $40 after their checks showed U.S. GMV meaningfully slowed in April. Firm is lowering 2Q U.S. marketplace growth to 3% y/y vs. previous 8% due to low buyer activity (eBay noted softening buyer activity at the end of Q1 on its Q1 call).

Increasing 2Q int'l marketplace to 18% y/y vs. previous 15%, driven by strength in int'l listings and only modest declines in conversion rates/ASPs. In total, only slightly lowering Q2 est - remain above consensus.

Removing as an Internet top pick as weakness in U.S. GMV will likely be a near-term overhang.

Notablecalls: NCN Ugg thinks EBAY will take a dive following these comments. His exact words:

"...The removal of the top-pick, combined with the lowering of their PT to $38 I suspect, will pressure the shares early on.."

Me? I concur. Have learned not to mess with the Ugg!


22ballet said...

I was mostly a buyer and a sometimes seller on ebay for 10
years and more than a 1,000 transactions I am taking my 100%
feedback and calling it quits. This ebay is just too
negative. They have found a way for buyers and sellers not
to trust each other. I am taking my wares to ioffer,
craigslist and amazon. But most importantly I am taking my
wallet OFF ebay. Smart move Piper Jaffray! 22ballet

Ric Roe said...

As a buyer turned seller, I have left eBay oover the recent changes which include higher fees, forced default search methods which are discriminatory, and the neutering of feedback.

Recent missteps by eBay executives should have everyone questioning the quality and vision of the new leadership at eBay.

First, in announcing pending changes in policies and final value fee increases, eBay CEO John Donahoe disrespectfully referred to anticipated dissenting opinions from buyers and sellers as "noise".

Not exactly a great way to demonstrate the value he places on the opinions of the very buyers and sellers upon whom his company is dependent upon for its continued survival.

Second, after small sellers rise up in arms, pull listings and cancel accounts due to: 1) announced fee increases, 2) discrimination with regard to listings visibility in Best Match search, and 3) new listing prompts insisting sellers reduce shipping fees when postal rates are increasing - Lorrie Norrington posts on an eBay blog that "eBay wants small sellers".

The horses had escaped already escaped the barn by the time Ms Norrington tried to close the doors on this one.

Not helping her case is the timing of the announcement that eBay had signed a discount fee agreement with at virtually the same time as Ms. Norrington's post, further documenting the preferred status for large sellers while adding possibility of similar deals to come.

Third, eBay announced that they were going to make PayPal the only form of electronic payment in Australia, eliminating competitive online payment processors, as well as direct bank deposit, and thus telling buyers and sellers that it is PayPal or hand to hand payment at pick up only on eBay Australia.

If successful the plan was reportedly considered to be enacted across eBay globally.

Then comes a non denial denial from eBay spokesman Usher Leiberman who wrote: "In the U.S., we are not mulling, planning, or otherwise seriously considering a move to PayPal-only," and..."There are U.S. market-specific reasons why PayPal-only is something we simply cannot do in the U.S."

But Leibermans' statement gets less definitive as he continued to write: "Categorical statements have a tendency to cause headaches down the road,". Apparently, the headache down the road is either his denial that future plans are to force PayPal only in the US or not.

At best, Leiberman's statement is confusing and seemingly contradicts itself.

Fourth, in a meeting with eBay buyers and sellers in Australia about plans to allow PayPal payments only on the site, eBay Vice President Simon Smith stated: "We're not allowing people to offer unsafe choices, just like in this democracy you can't go out and buy heroin on the streets."

Not exactly a well thought out analogy any quality executive would offer to customers as they express outrage over the new proposed policy.

Fifth, in an article here :,23739,23690645-8362,00.html

Alastair McGibon, eBay's trust and safety executive claims that undisclosed "internal numbers" are the basis for eBay's claim that PayPal is the safer payment method in Australia.

McGibbons, eBay, and PayPal refuse to offer any statistics to support their claim.

This is quite similar to the manner in which the mafia collects extortion. Don Corleone stops by your store and says he wants a fee from you on a regular basis, and for that fee he will promise that his mobsters do not burn down your store.

eBay is now extorting members in Australia in order to benefit their own bottom line.

What kind of executive extorts members on the basis of statistics which he can not and will not produce to support his case?

At what point is eBay going to realize that the current leadership is inept and doing more damage than any competition could hope to inflict?

eBay is rapidly losing buyers and sellers, and it is the executive leadership of the company holding the door open for them as they leave.

If this represents the quality of eBay leadership going forward, then this company seems destined to go from champ to chump in less time than it took AOL to self destruct.