eBay Inc.

- 2009
Case Notes Prepared by: Dr. Mernoush Banton Case Authors: Dr. Lori Radulovich

A.

Case Abstract

EBay Inc. ( .eBay.co!" #s a co!prehens#$e strate%#c !ana%e!ent case that #nc&udes the co!pany's Ca&endar year-end Dece!ber ()* 200+ ,#nanc#a& state!ents* co!pet#tor #n,or!at#on and !ore. -he case t#!e sett#n% #s the year 2009. .u,,#c#ent #nterna& and e/terna& data are pro$#ded to enab&e students to e$a&uate current strate%#es and reco!!end a three-year strate%#c p&an ,or the co!pany. 0ead1uartered #n .an 2ose* Ca&#,orn#a* EBay Inc. #s traded on the Ne 3or4 .toc4 E/chan%e under t#c4er sy!bo& EBA3.

B.

Vision Statement (Proposed"

ou&d &#4e to buy or

5#s#onary on&#ne bus#ness ,or $#s#onary entrepreneurs ho se&& a&!ost anyth#n%.

C.

Mission Statement (Actua&"

6e #ntend to ach#e$e our !#ss#on o, creat#n% the or&d's on&#ne !ar4etp&ace by #!pro$#n% and e/pand#n% across three !a#n areas: cate%or#es* ,or!ats* and %eo%raph#es. 6e #ntend to ach#e$e our !#ss#on o, creat#n% the or&d's &ead#n% e-co!!erce ,ranch#se by bu#&d#n% upon our core Mar4etp&aces bus#ness and bu#&d#n% our ad7acent bus#nesses. 6e #ntend to cont#nue to or4 to ard our !#ss#on o, creat#n% the or&d's &ead#n% eco!!erce ,ranch#se by #n$est#n% #n our core Mar4etp&aces se%!ent and cont#nu#n% to bu#&d our ad7acent Mar4etp&aces bus#nesses.

Mission Statement (Proposed"

eBay's !#ss#on #s to be the or&d's ((" !ost ut#&#8ed and pro,#tab&e (9" :trad#n% post.; 0a$#n% br#%ht and ta&ented e!p&oyees (9" that are ded#cated to ser$#n% both custo!ers and co!!un#t#es (+"* eBay pro$#des the !ost techno&o%#ca&&y ad$anced (<"* re&#ab&e* and secure (=" trad#n% p&at,or! (2" a$a#&ab&e to anyone ()"* any here* h#&e a& ays do#n% bus#ness #n a h#%h&y eth#ca& !anner (>". ). 2. (. <. Custo!er Products or ser$#ces Mar4ets -echno&o%y
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9. >. =. +. 9.

Concern ,or sur$#$a&* pro,#tab#&#ty* %ro th Ph#&osophy .e&,-concept Concern ,or pub&#c #!a%e Concern ,or e!p&oyees

D.

External Audit

CPM Competitive Profile Matrix

eBay
Critical Success #actors $ei%" t &atin % $ei%"te d Score

Ama on
&atin % $ei%"te d Score &atin %

!t"er
$ei%"ted Score

Ad$ert#s#n% .er$#ce @ Product Aua&#ty Pr#ce Co!pet#t#$eness Bser Cr#end&y 6ebs#te C#nanc#a& Pos#t#on Custo!er Doya&ty Product D#nes Mar4et .hare Custo!er .er$#ce -echno&o%y E!p&oyees E&oba& E/pans#on 'otal

0.09 0.0+ 0.0+ 0.0= 0.)0 0.)2 0.0+ 0.)0 0.0+ 0.)2 0.09 0.0= (.))

( ( ( ( 2 < < < ( < ( (

0.)9 0.2< 0.2< 0.2) 0.20 0.<+ 0.(2 0.<0 0.2< 0.<+ 0.)9 0.2) *.*+

< < 2 < ( ( ( ( < ( 2 <

0.20 0.(2 0.)> 0.2+ 0.(0 0.(> 0.2< 0.(0 0.(2 0.(> 0.)0 0.2+ *.++

) 2 ) 2 ) 2 2 2 2 2 ) 2

0.09 0.)> 0.0+ 0.)< 0.)0 0.2< 0.)> 0.20 0.)> 0.2< 0.09 0.)< (.,+

!pportunities ). Fpportun#t#es to o,,er trade@reta#& across a broad ran%e o, #ndustr#es and bus#ness !ode&s 2. .tron% &on% ter! %ro th e/pected #n !ob#&e techno&o%y usa%e and need ,or eBay's propr#etary .4ype -echno&o%y #n $o#ce and $#sua& co!!un#cat#ons (. Increas#n% %ro th o, on&#ne reta#& sa&es* e$en #th dec&#n#n% o,,&#ne reta#& en$#ron!ent and econo!y <. Increased speed and band #dth techno&o%y 9. A$era%e on&#ne consu!er #s educated and earns #nco!e o, G90*000 or !ore >. Ero th opportun#t#es #n %&oba& !ar4ets #n !any o, eBay's bus#ness &#nes
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=. Fpportun#t#es ,or a&&#ances to o$erco!e re%u&atory #ssues (ta/ co!p&#ance* trade #n counter,e#t %oods" -. Fpportun#t#es ,or cont#nued %ro th H PayPa& tota& pay!ent $o&u!e #n 200+ #ncreased 2=I o$er 200=. PayPa& has captured )9I o, B... and 9I o, %&oba& e-co!!erce trade. 9. E/pected 9.9I annua& %ro th o, or&d co!!un#cat#ons !ar4et #th B... eb con,erenc#n% e/pected to %ro )<.)I ,ro! 200+ throu%h )0. Due to ea4 econo!y and h#%h une!p&oy!ent rate* consu!ers !ay be &oo4#n% at subst#tute products at &o er pr#ces '"reats ). Co&&ect#on o, sa&es ta/es !ay re!o$e consu!er's perce#$ed $a&ue o, eBay ser$#ces 2. D#t#%#ous en$#ron!ent* such as &#!#ted Internet #n,or!at#on shar#n%* ta/ co&&ect#on* etc. (. Dyna!#ca&&y chan%#n% techno&o%y en$#ron!ent and !ar4et turbu&ence <. .tron% on&#ne and o,,&#ne co!pet#t#on across a&& eBay's bus#ness #ndustr#es 9. Ero #n% threat o, A!a8on >. J#s4 ,ro! B#&& Me Dater purchases o, consu!er's outstand#n% &oans ,ro! CI- Ban4 =. Jeta#& #ndustry sub7ect to re%#ona& or %&oba& econo!#c do nturn +. Potent#a& secur#ty breaches 9. Ero #n% de!ands on 6eb s#te support #th &#!#ted resources )0. Entry barr#er #s ,a#r&y &o External #actor Evaluation .E#E/ Matrix

0ey External #actors

!pportunities

$ei%"t

&atin%

$ei%"ted Score

). Fpportun#t#es to o,,er trade@reta#& across a broad

ran%e o, #ndustr#es and bus#ness !ode&s

0.0+ 0.09

< <

0.(2 0.2

2. .tron% &on% ter! %ro th e/pected #n !ob#&e

techno&o%y usa%e and need ,or eBayKs propr#etary .4ype -echno&o%y #n $o#ce and $#sua& co!!un#cat#ons (. Increas#n% %ro th o, on&#ne reta#& sa&es* e$en #th dec&#n#n% o,,&#ne reta#& en$#ron!ent and econo!y

0.0> 0.0( 0.0<

< < 2

0.2< 0.)2 0.0+

<. Increased speed and band #dth techno&o%y 9. A$era%e on&#ne consu!er #s educated and earns
#nco!e o, G90*000 or !ore

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>. Ero th opportun#t#es #n %&oba& !ar4ets #n !any o,

eBayKs bus#ness &#nes

0.0+ 0.09 0.0(

( 2 (

0.2< 0.) 0.09

=. Fpportun#t#es ,or a&&#ances to o$erco!e re%u&atory

#ssues (ta/ co!p&#ance* trade #n counter,e#t %oods"

+. Fpportun#t#es ,or cont#nued %ro th - PayPa& tota&

pay!ent $o&u!e #n 200+ #ncreased 2=I o$er 200=. PayPa& has captured )9I o, B... and 9I o, %&oba& e-co!!erce trade. 9. E/pected 9.9I annua& %ro th o, or&d co!!un#cat#ons !ar4et #th B... eb con,erenc#n% e/pected to %ro )<.)I ,ro! 200+ throu%h )0. Due to ea4 econo!y and h#%h une!p&oy!ent rate* consu!ers !ay be &oo4#n% at subst#tute products at &o er pr#ces
'"reats

0.0<

0.0+

0.0=

<

0.2+

). Co&&ect#on o, sa&es ta/es !ay re!o$e consu!erKs

perce#$ed $a&ue o, eBay ser$#ces

0.09 0.0( 0.0( 0.0> 0.0=

2 2 ( ( 2 2 ( ( 2 (

0.) 0.0> 0.09 0.)+ 0.)< 0.0+ 0.)+ 0.09 0.0> 0.2) +.12

2. D#t#%#ous en$#ron!ent* such as &#!#ted Internet

#n,or!at#on shar#n%* ta/ co&&ect#on* etc.

(. Dyna!#ca&&y chan%#n% techno&o%y en$#ron!ent and

!ar4et turbu&ence

<. .tron% on&#ne and o,,&#ne co!pet#t#on across a&&

eBayKs bus#ness #ndustr#es

9. Ero #n% threat o, A!a8on >. J#s4 ,ro! B#&& Me Dater purchases o, consu!erKs
outstand#n% &oans ,ro! CI- Ban4
0.0< 0.0> 0.0(

=. Jeta#& #ndustry sub7ect to re%#ona& or %&oba& econo!#c

do nturn

+. Potent#a& secur#ty breaches 9. Ero #n% de!ands on 6eb s#te support #th &#!#ted
resources
0.0= 0.0(

)0. Entry barr#er #s ,a#r&y &o

'otal

(.))

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Positionin% Map
Nu!ber o, 5#s#tors (0#%h"

eBay A!a8on

Fthers
Narro Product D#ne F,,er#n% 6#de Product D#ne F,,er#n%

Nu!ber o, 5#s#tors (Do "

E.

3nternal Audit
Stren%t"s ). 5a&ue propos#t#on enco!passes a $ar#ety o, e/chan%e !ed#u!s L products 2. E&oba& brand reco%n#t#on and stron% consu!er trust #n a secure trade and co!!un#cat#ons en$#ron!ent (. eBay co!!un#ty ,eedbac4 rep&#cates 6FM (6ord o, Mouth" ad$ert#s#n% <. Dar%e custo!er data base o, !u&t#p&e tar%et !ar4ets #n se$era& B2B* C2C and B2C #ndustr#es 9. Propr#etary .4ype techno&o%y #th stron% &on% ter! e/pected %ro th >. E&oba& presence #n (9 !ar4ets #th +>.( !#&&#on act#$e %&oba& users (200+" =. Do er costs o, #nternat#ona& e/pans#on due to :$#rtua&; bus#ness !ode& +. Bse o, eBay's B#&& Me Dater ser$#ce by !a7or reta#&ers such as Borders* Cont#nenta& A#r&#nes* Cu7#tsu* 2etB&ue* F$erstoc4* A5C* -osh#ba* -oys :J; Bs* and 6a&!art.co! 9. .4ype #s the or&d's ,astest-%ro #n% Internet co!!un#cat#on so,t are p&at,or! #th <09.( !#&&#on re%#stered users or&d #de as o, 200+

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)0. .tab&e operat#n% pro,#t !ar%#ns across a&& three bus#ness se%!ents desp#te dec&#n#n% econo!y #th current rat#o o, ).+ #s better than #ndustry a$era%e $ea4nesses ). eBay's &ac4 o, po&#c#n% trad#n% act#$#ty 2. D#t#%at#on #th potent#a&&y &ar%e ,#nanc#a& re!unerat#on #n se$era& areas: #nte&&ectua& property and techno&o%y #n,r#n%e!ents* trad#n% o, p#rated or counter,e#t %oods* etc. (. Ne er !ana%e!ent tea! -- chan%es recent&y !ade to .r. 5.P. pos#t#ons <. Jecent )0I reduct#on #n e!p&oyees #nd#cates poor resource use and potent#a& dec&#ne #n !ora&e 9. eBay's pr#or e/pend#tures ere ,ocused on trad#t#ona& #red routes and no 90I #s a&&ocated to ard #re&ess techno&o%y >. Dac4 o, cash d#$#dend pa#d to #n$estors reduces attract#$eness o, a tan%#b&e* current return on the stoc4 =. .ubstant#a& r#s4 e/posure due to potent#a& consu!er de,au&ts on &oans he&d by B#&& Me Dater custo!ers +. .toc4 pr#ce ,a&&en ,ro! G9+.)= #n 200< to G)= per share #n 2u&y o, 2009 9. Dec&#n#n% tota& net re$enue %ro th ,ro! 29I to ))I (decreases #n re$enue %ro th ,or the year 200= to 200+ #th reduct#ons #n re$enue %ro th o, Mar4etp&aces and Pay!ents bus#nesses* and on&y #ncrease #n Co!!un#cat#ons se%!ent. (). Jeduced re$enue %ro th acco!pan#ed by #ncreased 6eb s#te operat#ons costs (2+I #ncrease"* pay!ent process#n% (2<I #ncrease"* and .4ype te&eco!!un#cat#on costs (2+I #ncrease". #inancial &atio Analysis (Fctober 2009"
5ro6t" &ates 7 .a&es (Atr $s year a%o 1tr" Net Inco!e (3-D $s 3-D" Net Inco!e (Atr $s year a%o 1tr" .a&es (9-3ear Annua& A$%." Net Inco!e (9-3ear Annua& A$%." D#$#dends (9-3ear Annua& A$%." Price &atios Current P@E Jat#o P@E Jat#o 9-3ear 0#%h P@E Jat#o 9-3ear Do Pr#ce@.a&es Jat#o Pr#ce@Boo4 5a&ue eBay 9.=0 -2>.+0 -2+.90 ().99 ().+) NA eBay 2).9 NA NA (.9+ 2.(9 3ndustry )+.00 >.)0 )00.+0 29.29 9>.29 0.00 3ndustry 9(.< )>9.9 )>.9 2.++ )0.<= S8P 9)) -9.20 -+.)0 2<.=0 )2.9= )2.(0 )).++ S8P 9)) 2>.> )+.< (.< 2.)0 (.<(

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Pr#ce@Cash C&o

Jat#o

)(.=0 eBay =).9 2).0 )>.= ==.= 2(.9 )=.) eBay 0.02 ).+ ).+ NA ).< 9.+>

(>.>0 3ndustry (9.9 +.9 =.0 <0.= )0.9 =.+ 3ndustry 0.09 ).= ).9 -0.9 ).9 9.)(

)(.)0 S8P 9)) (+.2 9.9 >.9 (+.) )>.9 )).9 S8P 9)) ).)) ).9 ).2 2=.2 (.9 2).9+

Profit Mar%ins 7 Eross Mar%#n Pre--a/ Mar%#n Net Pro,#t Mar%#n 93r Eross Mar%#n (9-3ear A$%." 93r Pre-a/ Mar%#n (9-3ear A$%." 93r Net Pro,#t Mar%#n (9-3ear A$%." #inancial Condition Debt@E1u#ty Jat#o Current Jat#o Au#c4 Jat#o Interest Co$era%e De$era%e Jat#o Boo4 5a&ue@.hare
Adapted ,ro! .!oneycentra&.!sn.co!

Av% P:E

Price: Sales

Price: Boo4

;et Profit Mar%in .7/

)2@0+ )2@0= )2@0> )2@09 )2@0< )2@0( )2@02 )2@0) )2@00 )2@99

)+.00 )((.20 <).+0 9).)0 =<.+0 =2.+0 >9.<0 )>=.>0 (=0.(0 )9==.(0
Debt: E<uity

2.)9 9.99 =.)+ )(.2( 2<.(2 )9.>0 )>.(> 29.0= 2).<< =>.09
&eturn on E<uity .7/

).>) (.+( (.== >.0< )).9= +.9= 9.9< )2.9+ +.=> )9.2)
&eturn on Assets .7/

20.+ <.9 )+.9 2(.+ 2(.+ 20.= 20.> )2.) )).2 <.(
3nterest Covera%e

Boo4 Value: S"are

)2@0+ )2@0= )2@0> )2@09 )2@0< )2@0(

G+.>9 G+.>= G=.9= G=.)> G9.0( G(.==

0.09 0.02 0.00 0.00 0.02 0.0(

)>.) (.0 )0.( )0.+ )).> 9.)

)).< 2.( +.( 9.2 9.= =.=

29+.( (>.9 2<0.9 <)<.9 ))9.( )<9.>

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)2@02 )2@0) )2@00 )2@99

Adapted ,ro!

G2.+> G).29 G.9< G.+)

0.00 0.02 0.0( 0.0<

=.0 >.( <.+ ).)

>.2 9.< <.) NA

2(<.9 <(.> )0.< -).9

.!oneycentra&.!sn.co!

3nternal #actor Evaluation .3#E/ Matrix

0ey 3nternal #actors

Stren%t"s

$ei%"t

&atin%

$ei%"ted Score

). 5a&ue propos#t#on enco!passes a $ar#ety o,

e/chan%e !ed#u!s L products 2. E&oba& brand reco%n#t#on and stron% consu!er trust #n a secure trade and co!!un#cat#ons en$#ron!ent (. eBay co!!un#ty ,eedbac4 rep&#cates 6FM (6ord o, Mouth" ad$ert#s#n% <. Dar%e custo!er data base o, !u&t#p&e tar%et !ar4ets #n se$era& B2B* C2C and B2C #ndustr#es 9. Propr#etary .4ype techno&o%y #th stron% &on% ter! e/pected %ro th >. E&oba& presence #n (9 !ar4ets #th +>.( !#&&#on act#$e %&oba& users (200+" =. Do er costs o, #nternat#ona& e/pans#on due to M$#rtua&M bus#ness !ode& +. Bse o, eBayKs B#&& Me Dater ser$#ce by !a7or reta#&ers such as Borders* Cont#nenta& A#r&#nes* Cu7#tsu* 2etB&ue* F$erstoc4* A5C* -osh#ba* -oys MJM Bs* and 6a&!art.co! 9. .4ype #s the or&dKs ,astest-%ro #n% Internet co!!un#cat#on so,t are p&at,or! #th <09.( !#&&#on re%#stered users or&d #de as o, 200+ )0. .tab&e operat#n% pro,#t !ar%#ns across a&& three bus#ness se%!ents desp#te dec&#n#n% econo!y #th current rat#o o, ).+ #s better than #ndustry a$era%e
$ea4nesses

0.0> 0.0= 0.0( 0.0> 0.0= 0.0= 0.0> 0.0=

< < ( < < < < <

0.2< 0.2+ 0.09 0.2< 0.2+ 0.2+ 0.2< 0.2+

0.0>

<

0.2<

0.09

0.)9

). eBayKs &ac4 o, po&#c#n% trad#n% act#$#ty 2. D#t#%at#on #th potent#a&&y &ar%e ,#nanc#a& re!unerat#on
#n se$era& areas: #nte&&ectua& property and techno&o%y #n,r#n%e!ents* trad#n% o, p#rated or counter,e#t %oods* etc. (. Ne er !ana%e!ent tea! -- chan%es recent&y !ade to .r. 5.P. pos#t#ons

0.09 0.09

2 2

0.) 0.)

0.0<

0.0<

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<. Jecent )0I reduct#on #n e!p&oyees #nd#cates poor

resource use and potent#a& dec&#ne #n !ora&e

0.0( 0.09

2 2

0.0> 0.)

9. eBayKs pr#or e/pend#tures ere ,ocused on trad#t#ona&

#red routes and no 90I #s a&&ocated to ard #re&ess techno&o%y >. Dac4 o, cash d#$#dend pa#d to #n$estors reduces attract#$eness o, a tan%#b&e* current return on the stoc4 =. .ubstant#a& r#s4 e/posure due to potent#a& consu!er de,au&ts on &oans he&d by B#&& Me Dater custo!ers +. .toc4 pr#ce ,a&&en ,ro! G9+.)= #n 200< to G)= per share #n 2u&y o, 2009 9. Dec&#n#n% tota& net re$enue %ro th ,ro! 29I to ))I (decreases #n re$enue %ro th ,or the year 200= to 200+ #th reduct#ons #n re$enue %ro th o, Mar4etp&aces and Pay!ents bus#nesses* and on&y #ncrease #n Co!!un#cat#ons se%!ent. )0. Jeduced re$enue %ro th acco!pan#ed by #ncreased 6eb s#te operat#ons costs (2+I #ncrease"* pay!ent process#n% (2<I #ncrease"* and .4ype te&eco!!un#cat#on costs (2+I #ncrease".

0.0>

0.0>

0.0( 0.0< 0.0(

2 ) 2

0.0> 0.0< 0.0>

0.02

0.0<

'otal

(.))

+.1-

#.

S$!' Strate%ies
Stren%t"s ). 5a&ue propos#t#on enco!passes a $ar#ety o, e/chan%e !ed#u!s L products 2. E&oba& brand reco%n#t#on and stron% consu!er trust #n a secure trade and co!!un#cat#ons en$#ron!ent (. eBay co!!un#ty ,eedbac4 rep&#cates 6FM (6ord o, Mouth" ad$ert#s#n% <. Dar%e custo!er data base o, !u&t#p&e tar%et !ar4ets #n se$era& B2B* C2C and B2C #ndustr#es 9. Propr#etary .4ype $ea4nesses ). eBay's &ac4 o, po&#c#n% trad#n% act#$#ty 2. D#t#%at#on #th potent#a&&y &ar%e ,#nanc#a& re!unerat#on #n se$era& areas: #nte&&ectua& property and techno&o%y #n,r#n%e!ents* trad#n% o, p#rated or counter,e#t %oods* etc. (. Ne er !ana%e!ent tea! -- chan%es recent&y !ade to .r. 5.P. pos#t#ons <. Jecent )0I reduct#on #n e!p&oyees #nd#cates poor resource use and potent#a& dec&#ne #n !ora&e

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>. =.

+.

9.

techno&o%y #th stron% &on% ter! e/pected %ro th E&oba& presence #n (9 !ar4ets #th +>.( !#&&#on act#$e %&oba& users (200+" Do er costs o, #nternat#ona& e/pans#on due to :$#rtua&; bus#ness !ode& Bse o, eBay's B#&& Me Dater ser$#ce by !a7or reta#&ers such as Borders* Cont#nenta& A#r&#nes* Cu7#tsu* 2etB&ue* F$erstoc4* A5C* -osh#ba* -oys :J; Bs* and 6a&!art.co! .4ype #s the or&d's ,astest-%ro #n% Internet co!!un#cat#on so,t are p&at,or! #th <09.( !#&&#on re%#stered users or&d #de as o, 200+

)0. .tab&e operat#n% pro,#t !ar%#ns across a&& three bus#ness se%!ents desp#te dec&#n#n% econo!y #th current rat#o o, ).+ #s better than #ndustry a$era%e

9. eBay's pr#or e/pend#tures ere ,ocused on trad#t#ona& #red routes and no 90I #s a&&ocated to ard #re&ess techno&o%y >. Dac4 o, cash d#$#dend pa#d to #n$estors reduces attract#$eness o, a tan%#b&e* current return on the stoc4 =. .ubstant#a& r#s4 e/posure due to potent#a& consu!er de,au&ts on &oans he&d by B#&& Me Dater custo!ers +. .toc4 pr#ce ,a&&en ,ro! G9+.)= #n 200< to G)= per share #n 2u&y o, 2009 9. Dec&#n#n% tota& net re$enue %ro th ,ro! 29I to ))I (decreases #n re$enue %ro th ,or the year 200= to 200+ #th reduct#ons #n re$enue %ro th o, Mar4etp&aces and Pay!ents bus#nesses* and on&y #ncrease #n Co!!un#cat#ons se%!ent. )0. Jeduced re$enue %ro th acco!pan#ed by #ncreased 6eb s#te operat#ons costs (2+I #ncrease"* pay!ent process#n% (2<I #ncrease"* and .4ype te&eco!!un#cat#on costs (2+I #ncrease". &ast three years $=! Strate%ies
). Increase ad$ert#s#n%

!pportunities ). Fpportun#t#es to o,,er trade@reta#& across a broad ran%e o, #ndustr#es and bus#ness !ode&s 2. .tron% &on% ter! %ro th e/pected #n !ob#&e techno&o%y usa%e and need ,or eBay's propr#etary .4ype -echno&o%y #n $o#ce and $#sua& co!!un#cat#ons

S=! Strate%ies ). E/pand !ar4et#n% e,,orts #nto As#an !ar4ets here the econo!y #s stron%er (.)* .2* .(* F)* F(* F>" 2. Create 7o#nt $entures #th other %&oba& co!pan#es such as a#r&#nes* !ass reta#&ers* Internet based bus#ness ,or use o, eBay's B#&& Me Dater ser$#ce (.2* .>* .+* F)* F2* F(* F<*

#th spec#a& pro!ot#ona& d#scounts &#4e )0I o,, e$ery auct#on transact#on (6+* 69* 6)0* F)* F2* F+* F)0" 2. Pro!ote a rebate pro%ra! o, us#n% pro,#tab&e se%!ents such as PayPa& and .4ype ,or a spec#,#c per#od o, t#!e (69* 69*

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(. Increas#n% %ro th o, on&#ne reta#& sa&es* e$en #th dec&#n#n% o,,&#ne reta#& en$#ron!ent and econo!y <. Increased speed and band #dth techno&o%y 9. A$era%e on&#ne consu!er #s educated and earns #nco!e o, G90*000 or !ore >. Ero th opportun#t#es #n %&oba& !ar4ets #n !any o, eBay's bus#ness &#nes =. Fpportun#t#es ,or a&&#ances to o$erco!e re%u&atory #ssues (ta/ co!p&#ance* trade #n counter,e#t %oods" -. Fpportun#t#es ,or cont#nued %ro th H PayPa& tota& pay!ent $o&u!e #n 200+ #ncreased 2=I o$er 200=. PayPa& has captured )9I o, B... and 9I o, %&oba& eco!!erce trade. 9. E/pected 9.9I annua& %ro th o, or&d co!!un#cat#ons !ar4et #th B... eb con,erenc#n% e/pected to %ro )<.)I ,ro! 200+ throu%h )0. Due to ea4 econo!y and h#%h une!p&oy!ent rate* consu!ers !ay be &oo4#n% at subst#tute products at &o er pr#ces '"reats
). Co&&ect#on o, sa&es ta/es

F>"

6)0* F(* F<* F>* F+* F9"

!ay re!o$e consu!er's perce#$ed $a&ue o, eBay ser$#ces 2. D#t#%#ous en$#ron!ent* such as &#!#ted Internet #n,or!at#on shar#n%* ta/ co&&ect#on* etc. (. Dyna!#ca&&y chan%#n% techno&o%y en$#ron!ent and !ar4et turbu&ence

S=' Strate%ies ). Increase ,raud a areness to a&& custo!ers (.2* .<* -2* -(* -<* -+" 2. De$e&op a bund&#n% pro%ra!* ut#&#8#n% one ,or a&& ser$#ce o,,er#n% ,or &ar%e @ h#%h $o&u!e custo!ers and bus#ness partners (.)* .2* .<* .9* .>* .+* .9* -<* -9* -=* -9* -)0"

$=' Strate%ies ). Day o,, or4,orce by 9I and ,ree8e ra#ses ,or !ana%e!ent to #!pro$e ,#nanc#a& pos#t#on (6(* 6>* 6+* 69* 6)0* -2"

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<. .tron% on&#ne and o,,&#ne

9. >.

=.

+. 9.

)0.

co!pet#t#on across a&& eBay's bus#ness #ndustr#es Ero #n% threat o, A!a8on J#s4 ,ro! B#&& Me Dater purchases o, consu!er's outstand#n% &oans ,ro! CI- Ban4 Jeta#& #ndustry sub7ect to re%#ona& or %&oba& econo!#c do nturn Potent#a& secur#ty breaches Ero #n% de!ands on 6eb s#te support #th &#!#ted resources Entry barr#er #s ,a#r&y &o

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5.

SPACE Matrix C.
Conservative
= > 9 < ( 2 )

Aggressive

C.

I.
-= -> -9 -< -( -2 -) -) -2 -( -< -9 -> ) 2 ( < 9 > =

Defensive

-=

Competitive

E.

#inancial Stability .#S/ Jeturn on In$est!ent De$era%e D#1u#d#ty 6or4#n% Cap#ta& Cash C&o #inancial Stability .#S/ Avera%e Competitive Stability .CS/ Mar4et .hare Product Aua&#ty Custo!er Doya&ty Co!pet#t#on's Capac#ty Bt#&#8at#on -echno&o%#ca& Nno -0o

< > > > 9 9.2

Environmental Stability .ES/ Bne!p&oy!ent -echno&o%#ca& Chan%es Pr#ce E&ast#c#ty o, De!and Co!pet#t#$e Pressure Barr#ers to Entry Environmental Stability .ES/ Avera%e 3ndustry Stability .3S/ Ero th Potent#a& C#nanc#a& .tab#&#ty Ease o, Mar4et Entry Jesource Bt#&#8at#on Pro,#t Potent#a&

-< -) -( -2 -> =*.+

-) -) -) -2 -)

> 9 ) ( 9

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Competitive Stability .CA/ Avera%e

=(.+

3ndustry Stability .3S/ Avera%e

3-a/#s: C. O E. P 9.< O (-(.2" P 2.2 Q-a/#s: CA O I. P (-).2" O (<." P 2.+

>.

5rand Strate%y Matrix

&apid Mar4et 5ro6t" Quadrant II Quadrant I

$ea4 Competitive Position

Stron% Competitive Position

Quadrant III

Slo6 Mar4et 5ro6t"

Quadrant IV

). 2. (. <. 9. >. =.

Mar4et De$e&op!ent Mar4et Penetrat#on Product De$e&op!ent Cor ard Inte%rat#on Bac4 ard Inte%rat#on 0or#8onta& Inte%rat#on Je&ated D#$ers#,#cat#on

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3.

'"e 3nternal=External .3E/ Matrix

'"e 3#E 'otal $ei%"ted Score .tron% (.0 to <.0 I A$era%e 2.0 to 2.99 II 6ea4 ).0 to ).99 III

0#%h (.0 to (.99

I5

I5

5I

'"e E#E 'otal $ei%"ted Score

EBay Stores? 3nc. Med#u! 2.0 to 2.99

5II

5III

IQ

Do ).0 to ).99

@.

ASPM
Create 7o#nt $entures #th other %&oba& co!pan#es such as a#r&#nes* !ass reta#&ers* Internet based bus#ness ,or use o, eBay's B#&& Me Dater De$e&op a bund&#n% pro%ra!* ut#&#8#n% one ,or a&& ser$#ce o,,er#n% ,or &ar%e @ h#%h $o&u!e custo!ers and bus#ness partners

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0ey #actors !pportunities ). Fpportun#t#es to o,,er trade@reta#& across a broad ran%e o, #ndustr#es and bus#ness !ode&s 2. .tron% &on% ter! %ro th e/pected #n !ob#&e techno&o%y usa%e and need ,or eBayKs propr#etary .4ype -echno&o%y #n $o#ce and $#sua& co!!un#cat#ons (. Increas#n% %ro th o, on&#ne reta#& sa&es* e$en #th dec&#n#n% o,,&#ne reta#& en$#ron!ent and econo!y <. Increased speed and band #dth techno&o%y 9. A$era%e on&#ne consu!er #s educated and earns #nco!e o, G90*000 or !ore >. Ero th opportun#t#es #n %&oba& !ar4ets #n !any o, eBayKs bus#ness &#nes =. Fpportun#t#es ,or a&&#ances to o$erco!e re%u&atory #ssues (ta/ co!p&#ance* trade #n counter,e#t %oods" +. Fpportun#t#es ,or cont#nued %ro th - PayPa& tota& pay!ent $o&u!e #n 200+ #ncreased 2=I o$er 200=. PayPa& has captured )9I o, B... and 9I o, %&oba& e-co!!erce trade. 9. E/pected 9.9I annua& %ro th o, or&d co!!un#cat#ons !ar4et #th B... eb con,erenc#n% e/pected to %ro )<.)I ,ro! 200+ throu%h )0. Due to ea4 econo!y and h#%h une!p&oy!ent rate* consu!ers !ay be &oo4#n% at subst#tute products at &o er pr#ces '"reats ). Co&&ect#on o, sa&es ta/es !ay re!o$e consu!erKs perce#$ed $a&ue o, eBay ser$#ces 2. D#t#%#ous en$#ron!ent* such as &#!#ted Internet #n,or!at#on shar#n%* ta/ co&&ect#on* etc. (. Dyna!#ca&&y chan%#n% techno&o%y en$#ron!ent and !ar4et turbu&ence <. .tron% on&#ne and o,,&#ne co!pet#t#on across a&& eBayKs bus#ness #ndustr#es 9. Ero #n% threat o, A!a8on >. J#s4 ,ro! B#&& Me Dater purchases o, consu!erKs outstand#n% &oans ,ro! CI- Ban4 =. Jeta#& #ndustry sub7ect to re%#ona& or %&oba& econo!#c do nturn +. Potent#a& secur#ty breaches 9. Ero #n% de!ands on 6eb s#te support #th &#!#ted resources )0. Entry barr#er #s ,a#r&y &o

$ei%"t
0.0+ 0.09

ser$#ce AS 'AS < ( 0.(2 0.)9

AS ( <

'AS 0.2< 0.2

0.0> 0.0( 0.0< 0.0+ 0.09 0.0(

--< 2 ( --<

--0.)2 0.0+ 0.2< --0.)2

--( < < --(

--0.09 0.)> 0.(2 --0.09

0.0<

0.0<

<

0.)>

0.0=

0.)<

<

0.2+

0.09 0.0( 0.0( 0.0> 0.0= 0.0< 0.0> 0.0( 0.0( 0.0=

( ) ( ( --) 2 < -----

0.)9 0.0( 0.09 0.)+ --0.0< 0.)2 0.)2 -----

2 2 < < --2 ( 2 -----

0.)0 0.0> 0.)2 0.2< --0.0+ 0.)+ 0.0> -----

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'!'AB Stren%t"s ). 5a&ue propos#t#on enco!passes a $ar#ety o, e/chan%e !ed#u!s L products 2. E&oba& brand reco%n#t#on and stron% consu!er trust #n a secure trade and co!!un#cat#ons en$#ron!ent (. eBay co!!un#ty ,eedbac4 rep&#cates 6FM (6ord o, Mouth" ad$ert#s#n% <. Dar%e custo!er data base o, !u&t#p&e tar%et !ar4ets #n se$era& B2B* C2C and B2C #ndustr#es 9. Propr#etary .4ype techno&o%y #th stron% &on% ter! e/pected %ro th >. E&oba& presence #n (9 !ar4ets #th +>.( !#&&#on act#$e %&oba& users (200+" =. Do er costs o, #nternat#ona& e/pans#on due to M$#rtua&M bus#ness !ode& +. Bse o, eBayKs B#&& Me Dater ser$#ce by !a7or reta#&ers such as Borders* Cont#nenta& A#r&#nes* Cu7#tsu* 2etB&ue* F$erstoc4* A5C* -osh#ba* -oys MJM Bs* and 6a&!art.co! 9. .4ype #s the or&dKs ,astest-%ro #n% Internet co!!un#cat#on so,t are p&at,or! #th <09.( !#&&#on re%#stered users or&d #de as o, 200+ )0. .tab&e operat#n% pro,#t !ar%#ns across a&& three bus#ness se%!ents desp#te dec&#n#n% econo!y #th current rat#o o, ).+ #s better than #ndustry a$era%e $ea4nesses ). eBayKs &ac4 o, po&#c#n% trad#n% act#$#ty 2. D#t#%at#on #th potent#a&&y &ar%e ,#nanc#a& re!unerat#on #n se$era& areas: #nte&&ectua& property and techno&o%y #n,r#n%e!ents* trad#n% o, p#rated or counter,e#t %oods* etc. (. Ne er !ana%e!ent tea! -- chan%es recent&y !ade to .r. 5.P. pos#t#ons <. Jecent )0I reduct#on #n e!p&oyees #nd#cates poor resource use and potent#a& dec&#ne #n !ora&e 9. eBayKs pr#or e/pend#tures ere ,ocused on trad#t#ona& #red routes and no 90I #s a&&ocated to ard #re&ess techno&o%y >. Dac4 o, cash d#$#dend pa#d to #n$estors reduces attract#$eness o, a tan%#b&e* current return on the stoc4 =. .ubstant#a& r#s4 e/posure due to potent#a& consu!er de,au&ts on &oans he&d by B#&& Me Dater custo!ers +. .toc4 pr#ce ,a&&en ,ro! G9+.)= #n 200< to G)= per share #n 2u&y o, 2009

(.))
0.0> 0.0=

(.12 2 < < ( ) ( --< 0.)2 0.2+ 0.)2 0.)+ 0.0= 0.2) --0.2+ < ( ( < ( < --2

+.*0.2< 0.2) 0.09 0.2< 0.2) 0.2+ --0.)<

0.0( 0.0> 0.0= 0.0= 0.0> 0.0=

0.0>

) (

0.0> 0.)9

( )

0.)+ 0.09

0.09

0.09 0.09

-----

-----

-----

-----

0.0< 0.0( 0.09

--) ----2 2

--0.0( ----0.0> 0.0+

--2 ----) )

--0.0> ----0.0( 0.0<

0.0>

0.0(

0.0<

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9. Dec&#n#n% tota& net re$enue %ro th ,ro! 29I to

))I (decreases #n re$enue %ro th ,or the year 200= to 200+ #th reduct#ons #n re$enue %ro th o, Mar4etp&aces and Pay!ents bus#nesses* and on&y #ncrease #n Co!!un#cat#ons se%!ent. )0. Jeduced re$enue %ro th acco!pan#ed by #ncreased 6eb s#te operat#ons costs (2+I #ncrease"* pay!ent process#n% (2<I #ncrease"* and .4ype te&eco!!un#cat#on costs (2+I #ncrease". SCB'!'AB SCM '!'AB A''&AC'3VE;ESS SC!&E

0.0(

0.0(

0.0>

0.02

0.02

0.0<

(.))

(.D1 *.D*

(.-, 2.+9

0.

&ecommendations
De$e&op a bund&#n% pro%ra!* ut#&#8#n% one ,or a&& ser$#ce o,,er#n% ,or &ar%e @ h#%h $o&u!e custo!ers and bus#ness partners. -h#s ou&d be pro%ra!s such as B#&& Me Date* .4ype* auct#on at eBay at reduced pr#ce ,or B2B* B2C and C2C custo!ers. Cree bund&#n% can e/p#re #n 90 days.

L.

EPS/EBIT Analysis
G A!ount Needed: G+0 !#&&#on .toc4 Pr#ce: G2(.22 -a/ Jate: 2=.0I Interest Jate: 9I R .hares Futstand#n%: )*2+2*029
Common Stoc4 #inancin% Recession Normal Boom G900*000*000 G+00*000*000 G)*000*000*000 0 0 0 900*000*000 +00*000*000 )*000*000*000 )(*900*000*000 2)*>00*000*000 2=*000*000*000 )(*000*000*000 20*+00*000*000 2>*000*000*000 )*2+=*(9+*((( )*2+=*(9+*((( )*2+=*(9+*((( ().() (D.(D +).+) ,) Percent Stoc4 = *) Percent Debt Recession G900*000*000 (*200*000 <9>*+00*000 )(*<)(*>00*000 )2*9)>*+00*000 )*2+9*=9+*((( Recession G900*000*000 <*000*000 <9>*000*000 )(*(92*000*000 )2*+9>*000*000 )*2+2*029*000 ().)D ,) Percent Debt = *) Percent Stoc4 Recession G900*000*000 +00*000 <99*200*000 )(*<=+*<00*000 )2*9=9*200*000 )*2+(*>29*000 Debt #inancin% Normal G+00*000*000 <*000*000 =9>*000*000 2)*<92*000*000 20*>9>*000*000 )*2+2*029*000 (D.(2 Boom G)*000*000*000 <*000*000 99>*000*000 2>*+92*000*000 29*+9>*000*000 )*2+2*029*000 +).+)

EBIInterest EB-a/es EAR .hares EP.

EBIInterest EB-a/es EAR .hares

Normal G+00*000*000 (*200*000 =9>*+00*000 2)*9)(*>00*000 20*=)>*+00*000 )*2+9*=9+*(((

Boom G)*000*000*000 (*200*000 99>*+00*000 2>*9)(*>00*000 29*9)>*+00*000 )*2+9*=9+*(((

Normal G+00*000*000 +00*000 =99*200*000 2)*9=+*<00*000 20*==9*200*000 )*2+(*>29*000

Boom G)*000*000*000 +00*000 999*200*000 2>*9=+*<00*000 29*9=9*200*000 )*2+(*>29*000

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EP.

().)9

(D.((

+).(D

().((

(D.(1

+).+2

M.

Epilo%ue

EBay per,or!ed s&#%ht&y better than ana&ysts e/pected throu%h second 1uarter o, 2009. Je$enues and trad#n% $o&u!e cont#nued to dec&#ne #n the !ar4etp&aces se%!entS yet %ro th #n both the PayPa& and .4ype bus#ness se%!ents o,,set the dec&#ne #n the !ar4etp&aces bus#ness se%!ent. EBay a&so announced to sp#n o,, and !a4e an #n#t#a& pub&#c o,,er#n% o, #ts .4ype bus#ness se%!ent #n the be%#nn#n% o, year 20)0. As a resu&t o, eBay's #!pro$ed per,or!ance #n 2009 be#n% better than e/pected* eBay's stoc4 pr#ce has r#sen and caused ana&ysts to up%rade e/pected earn#n%s ,or eBay ,or the 2nd ha&, o, 2009.

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