EBAY : EBAY Huan Quy Le 12 March 2007


Overview: Overview Incorporated in California in 1996 Reincorporated in Delaware in 1998 IPO in September 1998 Provides online marketplace for the sale of goods and services, online payment and communication Grown from 2M users (‘98) to 181M (‘05) with 80M 'active users'


Summary: Summary Price: $30.98 Market Cap: 42.40B 52 week range: $22.83 - $40.82 Total Cash: 3.20B Total Debt: 0 P/E: 39.22 Average Volume (3m): 18,871,200


Growth: Growth


Business: Business Operates in three segments: Marketplaces: online commerce: auction format; fixed price format. Payments: PayPal send and receive payments online by e-mail address Communications: Skype enables voice over Internet protocol calls


Marketplaces Service: Marketplaces Service Feedback Forum: Comment / star rating system. SafeHarbor Program: resolve user disputes and responds to reports of misconduct. eBay Standard Purchase Protection: the buyer can file a claim under this Program, and may be reimbursed up to $200 . My eBay and About Me permits users to receive a report of their recent eBay activity bidding, selling, account balances, favorite categories and recent feedback Allows users to create their own personal home page on Ebay good for online business owner.


Paypal: Paypal Global Payments Platform enables any individual or business with an e-mail address to receive payments online PayPal is available in a local language and currency in 13 international markets. increased adoption of PayPal on eBay Marketplaces and merchant services PayPal also offers a Buyer Protection Program covers buyers up to $1,000 Seller Protection Policy: covers sellers for up to $5,000 per year Faster, easier and safer than traditional payment method. 19M business accounts and 77M personal accounts


Skype: Skype Enables free VoIP calls between Skype users online. Cheap international call rate. Telephones Skype had 75 million members in 225 countries and territories. Skype is a market leader in VoIP offerings in all countries in which it does business. Core of Communications business: Allow communication between buyers and sellers over the Internet


Competitors:: Competitors: Amazon.com Offer free shipping on purchase over $25. Great deals on books, DVDs, and electronic items. Google online payment called Google Checkout uBid.com offers both goods sold directly by the company and items sold by pre-approved uBid Certified Merchants  Trusted marketplace. Available in U.S only Craigslist.org Local classified ads jobs, housing, personals, for sale/barter/wanted, services, community, gigs and resumes categories


Risk: Risk A variety of alternative means need to expend significant resources in technology and marketing costly and reduces revenue. Acquisitions could result in operating difficulties, dilution, and other harmful consequences. Seasonal operations: strongest quarters of online growth in first and fourth quarters due to the holiday season Slow during summer month may not maintain level of profitability or rates of growth in certain months, quarters High-fee for listing and receiving PayPal payment.


Risk: Risk Internet is not a good medium for commerce and communication due to increase fraud, spoofing, viruses. Fraudulent activities and disputes between users of services may harm business. Risks of doing business internationally(law, infrastructure, transportation, fluctuations in currency exchange rates, strong local competitors, difficulties in staffing etc…)


Thesis points: Thesis points Ebay: Has durable competitive advantage. Paypal extends beyond eBay’s platform and become a standard online payment. Easy and convenient service. Expand internationally with new services (Skype) High growth potential


Thesis points: Thesis points Durable competitive advantage Dominates the online auction market Become a popular global marketplace eBay has already expanded into almost two dozen countries including China and India Provide outlet for used and unusual sale items Examples: Britney Spears’s hair, original Hollywood sign


Thesis points: Thesis points Paypal extends beyond eBay’s platform Quick and easy way of paying and receiving money through e-mail address Merchant’s website used PayPal as standard payment. Become Global Payments Platform. Provides free boxes, printing postage online, free pick-up Good customer service phone, email, chat Expand globally Acquisition of Shopping.com, Skype, Rent.com, Stubhub.com


Value Added Research (VAR): Value Added Research (VAR) Name: Robert Doolittle (eBay buyer) Bought used musical instrument on eBay Also buys books on amazon.com and music from online store Thinks eBay offers great deal on used gear Enjoys shopping online because of convenience and cheap price PayPal’ s primary credit card requirement is not very convenient when changed to a new card. Overall, ebay service is easy and great


Value Added Research (VAR): Value Added Research (VAR) CELLSTATION (State:CA) Andy Chan (owner, eBay power seller) Has a local store selling cell-phone accessory Dislikes the high listing-fee of ebay Sells more products on eBay than in store Prefers listing on eBay over Amazon. Overall, ebay service is great


Value Added Research (VAR): Value Added Research (VAR) Hung Le (Network admin): my father Skype user for several years Uses skype to call to family in Vietnam for free Call quality is good, cheaper than calling card Doesn’t like wearing headset But free so not an issue Thinks Skype offers more features than Yahoo Phone.


Value Added Research (VAR): Value Added Research (VAR) Vonage (Internet phone company) Michael Desenna, Sale Representative Vonage offers VoIP service, expected to reach 3M customers in 2007 Vonage and Skype are not trying to compete against each other market is big and both are trying to get a piece of market from big companies like Verizon and Atandamp;T. Internet phone can replace regular landline in future because it offers the same service with lower cost. Vonage partner with EarthLink allows user to use their phone wirelessly at hotspot.


Value Added Research (VAR): Value Added Research (VAR) My own experience: Good customer service by chat Connected quickly. Online printing postage, free box, free pickup Very convenient and easy to track the shipping. More success than selling on Craigslist.org


Cool stuff: Cool stuff Wi-Fi Phone for Skype by Belkin and Netgear Stylish, Wi-Fi, embedded Skype software Easy to use Skype VoIP service Must be in range of Wi-Fi 'hot spot'


Summary: Summary eBay is the world's leading online marketplace. It has a durable competitive advantage PayPal is becoming global payment standard. Expand internationally by acquisitions high potential for growth.


Slide22: Questions?