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Technology Stocks : eBay - Superb Internet Business Model -- Ignore unavailable to you. Want to Upgrade?

To: Kailash who wrote (2292)	3/16/1999 11:02:00 PM
From: Buster O. Hype	Read Replies (1) \| Respond to of 7772

I think people who buy EBAY based on 'SUPERB INTERNET BUSINESS MODEL' just don't get it. Investors salivate at 'high gross margin' businesses but the fact is, EBAY is nothing more than a royalty business. Sure it's great that your gross margins run up to 80% but what's not great is it is 80% of the 3-5% margin on the gross sales. So actually, EBAY's real gross margins run more like 4%. Don't even bother to compute for the net margin on this. So you have a business that would earn at the most 4% of the auction business it generates. So how big is this auction pie going to be. Analysts project about $3 billion in the next couple of years. EBAY is now selling for more than a slice of that pie, for more than the whole pie itself. And somebody smart on this thread said this pie may be as big as $300 billion. Wow!!! The whole auction business is going to be as big as the projected telecommunication equipment services revenue stream. EBAY will be bigger than the whole internet!!!