Buy Ebay

Now, or soon. Tomorrow would be good.

The company just announced that it will spin out Skype via IPO. I was kind of believing the NY Times and others who thought that they were going to sell it back to the founders, which would have made sense. Frankly anything would have made sense since the purchase didn't make sense in the first place and Ebay wasn't monetizing it. One could surmise that they bought it because it was cool and they could afford it.

Earlier this week, it was reported that Ebay has disposed of StumbleUpon, another nifty asset that they weren't really doing anything with. Stumble is a social web surfing site that gives users one-click web site recommendations all day long if you want them. It's a tremendous time waster but is sticky if you're bored and has a revenue model.

I am an infrequent Ebay user and use StumbleUpon from time to time. I want both to be successful and think they will be, but the reason that I like Ebay right here right now is that it is getting rid of them. Ebay's revenues have decelerated for the last 5 years and will be flat to down this year. It looks as though their core market, consumer-to-consumer auctions, has matured.

If you're a growth company that is not a growth company any more, what to do? Focus on cash flow and driving your core asset if you have one. They do. The fact that they were wasting time on other "stuff" is more than a distraction. The spinoffs signal, to me, that they are willing to get back to their core competence. The stock is not expensive. I haven't liked it for years. I do now.

Sure they were

February U.S. retail sales ex autos rose 0.7%. Right. January was also revised up. Maybe they only surveyed Walmart.

****

Mea Culpa

I forgot that I wrote the following Tuesday morning at 5:54, just ahead of a 6% rally. Even I don't read me.

"The futures are up nicely (yawn) and oil is flattish. There continues to be smart money around calling for a rally. I'll know it when I see it."

****

If you've been waiting for a chance to sell Ebay, you might as well do it today. The stock is trading up a couple of percent coming out of yesterday's analyst meeting where the company gave super rosy projections for 2011. Alrighty then.

****

GE's debt is no longer AAA. It may be that the U.S. government's debt is no longer AAA.

Mid-Year Thoughts

The first 6 months of 2008 were a tough time for equity investors, financial firms, IPOs, SUVs, housing-related companies and Eliot Spitzer.

The S&P 500 is down 12.9% for the year.

I'm sure the folks at EBay are steaming as a French court yesterday ordered EBay to pay $61 million to LVMH for failing to block the sales of fake Louis Vuitton goods. EBay claims that they are already spending $20 million per year to combat counterfeit auctions. This is going in a very bad direction for EBay as there is really no solution. With millions of auctions going on they can't vet everything. If they are potentially on the hook for tens of million of dollars per brand/per country that they do business in they could really be behind the 8 ball.

Last night while I was asleep, Henry Blodget at SAI summed up the more recent goings on in the Yahoo fiasco. It's time for Yahoo to do something right.