EBay chief sees possible impact from Iraq war
$73 shorts can probably breath a sign of relief as ebaY admits it's not immune to consumer sentiment, war jitters, AutoTrader competition, and further Asian area investment requirements. What interested me was what she did Not say regarding upcoming online auction patent litigation, she also avoided bragging about how many million of listings per day are being posted, a benchmark that many analysts use to track ebay growth.
I think that -.04 lower she guided for the year will all come in the this quarter less a +.01 penny surprise. My guess is Q1'03 will not be able to eclipse .30 anymore, which still shows growth when you consider that last quarters .28 came mostly from a real estate deal booked, not operating earnings. This news will put ebaY's $78 price under pressure, but we may not have the slam dunk short many were hoping for here, at least until Meg's presentation becomes the actual earnings report 50 days from now.
Now I'm sleeping better at night while holding this short, but I'm not going to add to my position either. Short interest should increase in February/March after decreasing in January, but this is not a good thing. Until ebaY concedes something bad enough to shake institutional longs who look at ebaY as one of their only winning positions, then this stock may continue to churn higher on reluctant short covering.
So I did not get the Tangible bad news I was looking for, but Meg admitted enough negative pressure issues to keep me from covering just yet. Keep in mind the only really good news here, continuted European growth and online transaction processing(PayPal), has been built into this stock for at least Q4'02 and even as early as Q3'02, so there are no surprises here. Good Luck.
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LA QUINTA, Calif., Feb 25 (Reuters) - Online auctions giant
eBay Inc. <EBAY.O> is eyeing a slump in U.S. consumer
confidence, but is more concerned about the potential business
impact of a war with Iraq, the company's chief executive said
on Tuesday.
EBay was seeing rapid growth in Germany, Belgium and the
Netherlands and was planning to return to the Japanese market,
Meg Whitman said in a dinner address at the Goldman Sachs
technology conference in this resort town.
Despite strength in the company's international business,
which she believed may outpace its U.S. operations one day,
Whitman said the geopolitical climate could affect sales.
"I think war in Iraq is a potential issue for us...many
eBay users will go from the Net to CNN," she said.
She was less downbeat but still cautious about U.S.
consumer confidence, which has dipped on war fears, weakness in
the stock market and a grim labour market.
"We have seen continued strength in the consumer," she
said, but added: "I think there is (now) some concern on our
part."
Ebay went public in 1998 and has steadily increased sales
and earnings, as virtually every other Internet company has
struggled.
Giving an insight into the online business, Whitman said
that at peak times -- Sunday morning and evening and Monday
evening -- between 5,000 and 6,000 items were listed for sale
every second.
A piece of diamond jewelery was sold every 83 seconds, she
said, while a sports utility vehicle was sold every 15 minutes.
The near-total dominance of electronic fund transfers,
combined with relatively short shipping times had made Germany
a rapid success, she said. The company also planned to return
to Japan, which it left after difficulties in gaining a toehold
in the market.
"Japan is an important market to us," she said. "Ultimately
we will go back to Japan...the timing needs to be right."
In terms of domestic competition, Whitman said the company
was "not so worried about" competition from AOL, but was
looking at challenges from sites like AutoTrader.com, which
were expanding into niche, eBay-like markets.
She said a dividend for shareholders might be possible as
the company completed consolidation efforts with competitors
and partially owned subsidiaries, and increased its scale.
"Philosophically, we are not averse to that," she said.
((Reporting by Ben Berkowitz, editing by Anne Marie Roantree;
; Reuters Messaging: ben.berkowitz.reuters.com@reuters.net;
(213) 380-2014))
REUTERS |
