eBay’s 2009 Analyst Day

logoebay_x451Today is eBay’s 2009 Analyst Day, and the meeting will be broadcast on the web starting at 8:00 AM PT. eBay is one of our significant current investments, and we have produced an extended series analyzing eBay’s economic moat and valuation. So we are eager to see what management will have to say for itself; the stock price has certainly been doing its share of speaking for some time now.

In anticipation of the meeting, eBay’s critics and observers have been pounding the web waves over the last week, offering their suggestions and speculating about future asset sales. Among the suggestions include selling the whole company to Microsoft or Google, selling Skype to Cisco, spinning off a portion of Paypal, and transforming the company into eBay 2.0. Trading at near 6x 2008 FCF, it strikes me that the former is most likely.

At any rate, we’ll be watching and eager to evaluate any proposed changes. Foremost in our minds are the strategic options for their cash held overseas, the possibility of creating an “eBay Local” site that concentrates solely on geographic distance (to snipe at Craigslist), and its progress on the current share buyback. Probably the best plan for current investors would be a coordinated debt offering and large stock tender offer. With no long-term debt and strong, cash flow businesses, they are not optimally levered in their current state. With today’s equity price, it seems a no-brainer to replace equity yielding over 15% FCF with debt costing 5-6%.

Disclosure: I, or persons whose accounts I manage, own shares of eBay at the time of this writing.

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3 responses to “eBay’s 2009 Analyst Day

  1. Here is a good article on that. http://tinyurl.com/ce3ls4

    Seems like ebay is on the right track and have a good plan.

  2. Thanks for that article, Jae; it is probably the best synopsis I’ve seen so far.

    I’d like to see them do more for local buyers, and they are planning to offer more for classified ad buyers and sellers.

    Also, they need to do better at presenting relevant search results from their other sites–e.g., half.com, shopping.com.

    Paypal looks good, and I hope they deliver on their promises. It is market leading, and a great business to be in.

  3. Pingback: Hopping Happenings at eBay « Wide Moat Investing

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