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Wednesday, April 20, 2005

Long View On eBay

Bambi Francisco, the well known columnist covering internet stocks talks about eBay's Imploding marketcap and decline in traffic. Excerpts with edits and comments:
With the swiftness with which companies are built,esteemed, challenged, and humbled, it's hard to put any credence in quarterly outlooks. eBay's performance speaks about the life cycle of the greatest Internet company on Earth - an illuminative exercise. Ascent, fame, and the eventual humbling comedown characterize the lifecycle. eBay Inc.will turn 10 this year and reach its first $1 billion in revenue in a three-month period. eBay's market cap is some $10 billion less than that of Google Inc, which is three years younger. eBay, is watching its market cap implode, and its virtual foot traffic diminish. Traffic to its site dropped by 14 percent in February, and 5 percent in March, according to comScore Networks. The March decline was the ninth consecutive month that eBay saw its online audience decline year-over-year.
The longer eBay's performance stays in this humbled state, its hiring abilities get affected. The best and brightest flocking to Google, Yahoo's - the competition for talent is intensifying.Importantly, if eBay's business model appears to be growing more vulnerable, entrepreneurs will become more encouraged to challenge it. There is no compelling reason for any seller to limit to eBay's marketplace when the entire Web is the marketplace? It may be that eBay's just getting ready for Act II, and its setback after 10 years may mark the start of a new beginning .In the past there had been big concerns surrounding eBay during the recession was whether its marketplace would see a decline in business.The opposite was true. eBay proved that it could operate in good and bad times.eBay is seen to be increasingly greedy and with so many other internet companies providing more easy interfaces, ebay looks a little difficult to use with some cumbersome procedures – eBay needs to benchmark with Google and Amazon for Usability and must come out of this present tight situation and relaunch itself with focus on growth and hiring best talent.
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