Note: This page will be updated periodically. For current information, please refer to eBay's financial profile.
eBay is the one of the world's premier online properties and the corporate home of a number of successful Internet brands. With over 300 million registered users, eBay's core site hosts millions of retail and wholesale transactions in some 30 countries encompassing tens of millions of transactions every day. eBay operates the online market's leading VOIP network (Skype, with over 405 million registered users) and payment system (PayPal, with over 200 million registered users). eBay was founded in 1995 by a 28-year-old Internet entrepreneur named Pierre Omidyar and is today headed by President and CEO John Donahoe, who took over from former President and CEO Meg Whitman in March of 2008. Taken public in 1998, eBay's market capitalization is approximately $15 billion. During the first three quarters of 2008, eBay's marketplace trading volume was some $46 billion in transactions.
eBay Today
eBay's position continues to change as online retail evolves. eBay's 1998 IPO occurred during the fabled "dot com bubble" and was influenced by many of the forces that made other technology and Internet IPOs so (in)famous. eBay's initial $18 target price gave way to a steady climb, reaching a high of just over $58 per share in 2004 before embarking on a steady decline. eBay's revenue growth was initially 30 percent or more year over year, making eBay one of the breakout winners of the dot com race.In recent quarters, however, year over year growth has slowed, with an increasing proportion of overall growth coming from non-core businesses. Some of this decline is due to increasing competition from competitors, including Amazon.com Marketplace, Google, and Yahoo. Recent economic conditions have also taken a toll, with revenue, profit, and listing volume all falling during the last part of 2008.
Though John Donahoe has sought to continue Whitman's strategy to strengthen eBay's core auction business while at the same time diversifying eBay's offerings, a number of strategic moves as of late have been controversial, meeting with mixed reviews. Recent changes in rules and fees and an increased emphasis on fixed-price sales selling have alienated some portions of eBay's selling community even as eBay's competition grows. In October, eBay announced a round of layoffs, cutting 10 percent of its approximately 16,000-strong workforce worldwide, incurring restructuring expenses of 70 to 80 million dollars during the fourth quarter. eBay's notable holdings continue to influence eBay's trajectory, for better and for worse:
- Skype—The wildly popular Skype VOIP (voice-over-internet-protocol) service has been eBay's largest acquisition to date, purchased in 2005 for approximately $3.1 billion, though eBay was later forced to write its value down by over a billion dollars. Despite rumors that Donahoe has considered a sale of the unit, eBay has pressed ahead with Whitman's vision for Skype as a communications hub not just for VOIP customers but for eBay buyers and sellers in particular, now able to interact in relation to ongoing eBay transactions. Though some have praised the approach as innovative, others have suggested that the Skype service is a poor fit for eBay's business model and that eBay sellers haven't embraced it.
- PayPal—eBay acquired PayPal for $1.5 billion in 2002. Unlike Skype, PayPal is a natural match, with the vast majority of eBay transactions involving online payments through PayPal, especially given eBay's recent (and controversial) rule change banning most competing payment methods. PayPal has also grown to become a premier payment system for ecommerce in general, second only to direct credit card transactions.
- Craigslist—In 2004 eBay paid an undisclosed sum to acquire a 28.4 percent interest in Craigslist, at the time becoming its largest single shareholder. eBay initially kept a low profile vis-a-vis Craigslist, no doubt anticipating that the classified service's growth would bear fruit. In 2008, however, eBay filed suit against Craigslist, claiming that management actions had diluted eBay's holdings by over 10 percent, costing eBay control of a board seat. Craigslist responded by noting that eBay's forays into classified advertising represented a direct threat to Craigslist's core business. The two remain locked in an ongoing legal battle—a costly condundrum for eBay, given that Craigslist's popularity as a direct eBay competitor continues to increase.
- Half.com—Half.com, acquired by eBay in 2000, represented eBay's foray into used media. Half.com was at the time a rising star in a market now dominated by the likes of Amazon.com Marketplace. Half.com remains a perennial favorite amongst students, bibliophiles, game enthusiasts, and film buffs and was not initially seen to compete directly with eBay's core auction offerings. Recent changes in eBay's fee structure and policies, however, have muddied the picture.
Today eBay finds itself at something of a crossroads. Despite retaining incredible mindshare, eBay is struggling at the moment to continue to maintain a coherent strategic focus, to capitalize on its market-leading position, and to face down stiff competition from all sides. Murmurs from investors in some corners have favored spinning off thriving units such as Skype and PayPal to prevent eBay's core site from slowing their growth and/or value as brands. The leadership of John Donahoe has been controversial at times as well, with changes to policies, fees, and shifts from eBay's focus on auctions and independent sellers drawing fire from many longtime and high-volume traders.
Despite these struggles, eBay remains the premier online trading brand and marketplace around the world. Though current economic conditions complicate eBay's immediate prospects and encroaching competition complicates long-term strategy, market leadership and mindshare probably remain eBay's to lose.
