Of course nobody knows the answer to your question. But I have some opinions about the differences between Egghead and Ebay.
(1) Egghead sells a very limited range of products (software, some hardware); Ebay brokers all products.
(2) Egghead has a great deal of online and brick-and-mortar competition; Ebay is the only online auction site that has successfully attracted a huge population of individuals selling their items. Most of the auction sites are either re-selling computer products and office supplies, or they are too small to attract the buyers.
(3) Ebay carries no inventory, they are a true auction house and make money through commissions. Therefore, no inventory expenses, no write-offs for obsolete inventory, no storage costs, etc. Egghead carries its own inventory (as I understand it, I may be way off)
(4) Ebay has an extremely loyal base of sellers and shoppers. If you're selling something on Ebay, you know you'll get a good number of hits to your listing. And I think there is at least a perception, that the selling price will be higher than what you'd get on other auction houses. If you're shopping for something unusual, there's a good chance you'll look for it at Ebay (once you know about Ebay). There's also a better than average chance you'll find it.
Egghead sells products that you can buy at dozens of places, so there is less customer loyalty; more comparison shopping.
Ebay encourages customer loyalty with its "rating system" on registered users. Each user has a rating number based solely on feedback from other registered users; the higher the number, theoretically, the more reliable the user. Ebay has people with ratings in the high thousands and probably higher. This "goodwill" takes a long time to establish and registered users will not want to give up their goodwill to go to another auction house, unless they stand to make more money at the other auction house.
(5) Ebay hasn't dissappoined many shareholders simply because they just became public. A lot of people lost a lot of money on Egghead, probably including institutional investors, and they hold grudges.
(6) Ebay is a "pure" internet company. They began as an internet company; all their efforts have been toward becoming an internet company. Egghead was a brick-and-mortar that failed and is now trying to re-invent themselves. This worries people (I think).
All this said, I'm having a hard time pulling the trigger at 63 7/8. With Ebay at 2.5 Billion market cap. |
