Ebay to do the unthinkable?

By: ispeculatornew
Date posted: 09.25.2009 (4:41 am) | Write a Comment  (1 Comment)

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ebay-logo1In the start of the year’s stock competition, I had picked Ebay as one of my four picks and while it is not my best pick, its 68% return so far in 2009 has been impressive, especially considering how it continues to make bad business decisions. While the main problem with Ebay is that it seems to lack innovation and while it had many superior products, it is slowly but surely losing its lead in its different segments.

At the start of the month, I suggested it was time to dump Ebay after it decided to part with most of its Skype business. Now, to my surprise, Ebay CEO John Donahoe confirmed he was open to spinning off Paypal, which in my opinion is probably the most attractive part of the company at the moment. “When I feel the business will be better off separately, we’ll do what we did with Skype,” To even publicly talk about this is worrying long term for the company. Of course, this could help the stock short term as there is no doubt that there would be a long line of potential buyers for Paypal if Ebay was to decide to sell it.

The problem though is that discussing it publicly will probably not help inspire innovation or encourage those working at Paypal. Actually, I do not see much upsize in going out and saying this and would say this was probably a mistake by the EBay CEO.

One thing that is certain though is that if Ebay does actually decide to sell, I’ll be thinking about holding Ebay as the company looks for buyers.. but be sure that I would drop out as soon as the sale is complete, there will not be much value left in the company if ever they do part with their electronic payment segment which has been responsible for much of Ebay’s growth in recent years.

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1 Comment

  1. […] investors notice how much the business was worth. Ebay even mentioned the idea it could sell Paypal. While that does not excite me very much in regards to Ebay’s long term future, these actions […]

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