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eBay INC Stock Has Turned Around Under CEO John Donahoe; Really?

eBay INC Stock Has Turned Around Under CEO John Donahoe; Really?
EventHorizon1984
31 August 2012

The bulk of this article was originally scheduled for publication on July 31st.  Then, 'life happened'.  It is now August 31st, but the updated numbers are just as interesting.

While much is said about eBay INC's stock, there is one fact rarely presented.  The matter of eBay INC stock dividends.  According to eBay INC's official investor page:

Which means for the average investor to materially benefit from eBay INC stock, they must sell and/or buy the stock.  In other words, 'buy low, sell high', short, et al.

Many analysts (who make money on fees You pay them) give the advice 'eBay stock is a long term investment.'  Is this stale, and cliche advice a bad thing?

Well ....

• "Ebay will blow all estimates away!
  The stock has NO choice but to go up
  I predict this will hit $50 before the end of July. . ."
  Ebay Pays My Bills, 11 July 2012

When John Donahoe became eBay INC CEO on 31 March 2008, the opening bell share price was $29.87.  At the 31 July 2012 closing bell, the price was $44.30.

Various organizations tooted "eBay's Comeback".  Our thoughts were ....

• "Sure.  Fine.  Whatever."
  Dana Scully, X-Files, Syzygy

Under the tenure of CEO John Donahoe, eBay INC's share price numbers are fairly cut and dry.

			Share Price
	3/31/2008		7/31/2012		$ Increase        (1)		% Increase   (2)			Dividends
eBay	29.87		44.3		$14.43	$3.33	48%	11%		No

(1)	Average Yearly Increase Per Share
(2)	Average Yearly Percent Increase

This is considered a major turnaround.  At least to the people who want to sell you more eBay INC stock.

But it is amusing to see how eBay INC's numbers compare to the stocks of companies that are considered to be in a downturn or the doldrums. 

For example, two companies that eBay INC is constantly compared to:

			Share Price
	3/31/2008		7/31/2012		$ Increase        (1)		% Increase   (2)			Dividends
eBay	29.87		44.3		$14.43	$3.33	48%	11%		No
Google	435.64		632.97		$197.33	$45.54	45%	10%		No
Walmart	52.20		74.43		$22.23	$5.13	43%	10%		Yes

(1)	Average Yearly Increase Per Share
(2)	Average Yearly Percent Increase

Percentages look the same, don't they?

• "50% to 60% of PayPal's transactions are funded with a credit or debit card, so Visa, MasterCard, and the other card brands still get their normal fees more than half of the time PayPal is used."
  Greg Smith, Jennifer Dugan

What about the financial portion of eBay INC, PayPal?  After all John Donahoe said, "PayPal is a business that will be bigger than eBay".  And PayPal, an eBay INC company, recently announced partnering with Discover.

What is the tale of the tape for eBay INC share price versus the major credit card companies?

			Share Price
	3/31/2008		7/31/2012		$ Increase        (1)		% Increase   (2)			Dividends
eBay	29.87		44.3		$14.43	$3.33	48%	11%		No
VISA	62.60		129.07		$66.47	$15.34	106%	25%		Yes
MasterCard	218.00		436.57		$218.57	$50.44	100%	23%		Yes
American Express	43.21		57.71		$14.50	$3.35	34%	8%		Yes
Discover	16.00		35.96		$19.96	$4.61	125%	29%		Yes

(1)	Average Yearly Increase Per Share
(2)	Average Yearly Percent Increase

With one exception, and that by a small margin, buying stock in a major credit card company was a better long term investment.  And do notice that in addition to the large share price gains, the credit card companies pay a dividend.  eBay INC does not.

Incidentally, the news that gets buried in the 2013 PayPal and Discover partnership spin; Discover partners with Google. 

It is not John Donahoe boldly leading PayPal into credit card territory.  It's Discover aggressively expanding into e-commerce by partnering with BillToMobile (3/27/2012), Google (8/16/2012), and PayPal (8/22/2012, 2013).  PayPal got swept up.

• "Why is Apple so Cheap?"
  Andres Cardenal, 12 July 2012

Almost finally, here are the numbers of the three companies we've used in previous eBay INC share price comparisons.

			Share Price
	3/31/2008		7/31/2012		$ Increase        (1)		% Increase   (2)			Dividends
eBay	29.87		44.3		$14.43	$3.33	48%	11%		No
Amazon	70.25		233.3		$163.05	$37.63	232%	54%		No
Starbucks	17.06		45.28		$28.22	$6.51	165%	38%		Yes
Apple	143.27		610.76		$467.49	$107.89	326%	75%		Yes

(1)	Average Yearly Increase Per Share
(2)	Average Yearly Percent Increase

 

Had you bought stock from our mini-trio of Amazon, Starbucks, Apple, you would have made more than the amount you sunk into eBay INC.

• "eBay is bigger than Madagascar"
  Vincent Trivett

To be fair, this is August 31st not July 31st.  Today's stock prices are:

			Share Price
	3/31/2008		8/31/2012		$ Increase        (1)		% Increase   (2)			Dividends
eBay	29.87		47.47		$17.60	$3.98	59%	13%		No
Amazon	70.25		248.27		$178.02	$40.31	253%	57%		No
American Express	43.21		58.30		$15.09	$3.42	35%	8%		Yes
Apple	143.27		665.24		$521.97	$118.18	364%	82%		Yes
Discover	16.00		38.73		$22.73	$5.15	142%	32%		Yes
Google	435.64		685.09		$249.45	$56.48	57%	13%		No
MasterCard	218.00		422.90		$204.90	$46.39	94%	21%		Yes
Starbucks	17.06		49.61		$32.55	$7.37	191%	43%		Yes
VISA	62.60		128.25		$65.65	$14.86	105%	24%		Yes
Walmart	52.20		72.60		$20.40	$4.62	39%	9%		Yes

(1)	Average Yearly Increase Per Share
(2)	Average Yearly Percent Increase

Given the overall changes of non-eBay INC share prices versus eBay INC stock price, it may have been kinder not to include this chart.

If you had heeded the call of your analyst to buy eBay stock on 31 March 2008, as a long term investment?  Today, almost four and a half years later, eBay INC stock is at a sustained price, higher than your purchase price.  You are now $3.98 a share per year ahead.

Temper that $3.98 with the fact that had you instead purchased stocks in aggregate from companies considered to be eBay INC competitors or peers, your investment would have been significantly larger than your eBay INC investment.

As an average investor, the question you face is today 'buy, hold, or sell?'.  Based on the four year stock price track record of the companies above, is 'buy, hold?' really a question that needs to be asked?

eBay INC's next Earnings Call is scheduled for 17 October 2012.

Where will eBay INC's stock price be then?  And what will be the share prices of eBay INC's competitors and peers?

We're projecting an eBay INC $50 share price by early 2013.  The other companies?  Much more of the same.

• "28 years of social media experience with Fortune 500 global brands"
  LiveWorld.com

Finally, do you know that LiveWorld, a corporation that "works with eBay on its active website social venues" has stock?  With eBay INC and Walmart providing LiveWorld "approximately 51% of" it's total revenue, perhaps this is a stock worth checking.

			Share Price
	3/31/2008		7/31/2012		$ Increase      (1)		% Increase   (2)			Dividends
eBay	29.87		47.47		$17.60	$3.98	59%	13%		No
LiveWorld	0.19		0.25		$0.06	$0.01	32%	7%		No

(1)	Average Yearly Increase Per Share
(2)	Average Yearly Percent Increase

 

Affordable too.

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"investors may be getting impatient with companies that show no sign of profit, such as Amazon. Its stock has dropped from more than $200 a share in April to around $135 today, while eBay's has only eased from a high of $234 in late April to around $195"
Robert Hof, BusinessWeek, 31 May 1999

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Neil Armstrong, First Moon Walker, Passes Away at 82

Neil Armstrong, First Moon Walker, Passes Away at 82
EventHorizon1984
25 August 2012

Neil A. Armstrong, Astronaut, the first man to step¹ upon the surface of the Moon, died today at the age of 82.

Except for those taking the view "history is myth" or the 6% 'fooled twice' type or Internet Trolls, the planetary population knows about Neil Armstrong and the history making Apollo 11 flight.  And over the next few news cycles, people will know much more.

Such as occasional brushes with death.

"If we die, do not mourn for us.  This is a risky business we're in, and we accept those risks."  Virgil "Gus" Grissom

20 April 1962 - X-15

• "The only other alternative at that point would have been Palmdale and I didn't want to get into their traffic pattern."  Neil Armstrong
  

Perhaps not so much as a brush, but more of a 'here's my card' event.

Test pilot Neil Armstrong was flying the X-15 when on the return segment, "the X-15 pulled up and essentially skipped off the top of the atmosphere, returning to space."  In short, instead of final approach to a near-deserted landing area, the X-15 was "gliding" somewhat near or over Los Angeles.

Piloting skill turned a possible disaster into a safe flight home.

"I began to turn back home"
Neil Armstrong

16 March 1966 - Gemini 8

• "We have serious problems here" David Scott

After the first successful docking in space, Gemini 8 Astronauts Neil Armstrong and David Scott experienced a serious thruster problem.

"After backing away from the Agena, the spacecraft had started to whirl at a dizzying rate of one revolution per second. Armstrong suspected that the maneuvering thrusters were about finished. He and Scott were also having trouble seeing the overhead panel dials; their physiological limits seemed near. They were dizzy, and their vision was blurred."

You can view the government style documentary of Gemini 8:

• Gemini 8, This is Houston Flight

Or the dramatized version:

• From The Earth To The Moon

Suffice to say, both men returned safely to the Earth.

6 May 1968 - LLRV

When Landing on the Moon, Practice Makes Perfect

The above photo from NASA, shows what a Lunar Landing Research Vehicle (LLRV) looks like after it crashes.  With the parachutist being Neil Armstrong.

As described:

• "Armstrong made his 21st flight in the vehicle. It was a disaster." ... "about 230 feet above the desert floor the LLRV started pitching forward and picking up speed." ...  "Within seconds Armstrong was flying on his side and realized ejecting was his only recourse.  A little less than 200 feet from the ground he separated from the LLRV." ... "the crash wasn’t related to the design of the LLRV but a problem with the propellant."

20 July 1969 [GMT] - Apollo 11

• "I thought we had a 90% chance of getting back safely to Earth on that flight but only a 50-50 chance of making a landing on that first attempt."  Neil Armstrong

If you're thinking, there was all the time in the world for Neil Armstrong to land the Lunar Module Eagle:

• Mission time 102:45:31  Duke:  "30 seconds."

The "30 seconds" was time remaining until "Bingo"; which meant 'land in 20 seconds or abort.'

• Mission time 102:45:40  Aldrin:  "Contact Light."

Now suppose you're a pilot that manages to land their craft with 21 seconds² of fuel.  Was that all the time in the world?

For video of the landing, from the view of "Buzz" Aldrin's window:

• http://www.hq.nasa.gov/alsj/a11/A11Landing.mov

When asked about the reason for closing the Lunar Module hatch:

• "To avoid having somebody say 'Were you born in a barn?'" Neil Armstrong

"Pretty sure the law of the land states that everyone has the right to be an idiot."  Gregory House, M.D., House (2004-2012)

Apparently as Fate would have it, his death was not career related, but more a pernicious ala George S. Patton, Jr.-type event"

• "His family announced the death in a statement and attributed it to “complications resulting from cardiovascular procedures.”"

Routine surgery mind you.

• Neil Armstrong recovers after heart bypass surgery
• BBC News, 8 August 2012
• "Mr Armstrong, who turned 82 on Sunday, had surgery to relieve four blocked coronary arteries."

Much as we would love to comment on this ... and then promptly get sued ... we close with a collection of first words from Neil Armstrong's peers.

First thing said from the surface of the Moon is "Contact ..."

• "Lunar Surface Sensing Probes extended from three landing legs. A sensor on the tip indicated when the lunar surface was touched."

What Apollo Astronauts said when they first set foot upon the Moon:

Apollo 11 - 21 July 1969 [GMT]
Neil Armstrong (1930-2012)
"That's one small step for (a) man, one giant step for mankind."
Edwin "Buzz" Aldrin, Jr.  (1930- )
"Beautiful view!  Magnificent desolation."
"Looks like the secondary strut had a little thermal effects on it right here, Neil."

Apollo 12- 19 November 1969 [GMT]
Charles "Pete" Conrad, Jr. (1930-1999)
"Whoopie!  Man, that may have been a small one for Neil, but that's a long one for me."
"Off the ... Oooh, is that soft and queasy."  or "(s)quishy"
Alan Bean  (1932- )
"Okay?  Okay.  My, that Sun is bright."

Apollo 14 - 5 February 1971 [GMT]
Alan Shepard  (1923-1998)
"Okay, you're right. Al is on the surface. And it's been a long way, but we're here."
Edgar Mitchell  (1930- )
"That last one is a long one."

Apollo 15 - 31 July 1971 [GMT]
David Scott  (1932-  )
[long awed silence]
"Ok.  Ah.  Ok Houston as I stand out here in the wonders of the unknown at Hadley, I sort of realize there's a fundamental truth to our nature.  Man must explore.  And this is exploration at its greatest."
James Irwin  (1930-1991)
"Boy, that front pad is really loose, isn't it?"

Apollo 16 - 21 April 1972 [GMT]
John Young  (1930-  )
"Okay.  There you are: Mysterious and Unknown Descartes. Highland plains. Apollo 16 is gonna change your image. I'm sure glad they got ol' Brer Rabbit, here, back in the briar patch where he belongs."
Charles Duke  (1935-  )
"Fantastic! Oh, that first foot on the lunar surface is super, Tony!"

Apollo 17, 11 December 1972 [GMT]
Eugene Cernan  (1934-  )
"I'm on the footpad. And, Houston, as I step off at the surface at Taurus-Littrow, we'd like to dedicate the first step of Apollo 17 to all those who made it possible."
"Jack, I'm out here. Oh, my golly! Unbelievable! Unbelievable; but is it bright in the Sun."
Harrison "Jack" Schmitt  (1935-  )
[Harrison Schmitt - "At some point, and maybe it's here, I stepped down off the ladder onto the sloping side of a boulder which had little balls of glass and debris that made it very slick. And I slipped and my left leg went out from under me. Fortunately, I was still hanging onto the ladder."]
"You landed in a crater!"
"Why don't you come over here and let me deploy your antenna."

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"People love conspiracy theories ... but they were never a concern to me -- because I know that one day somebody's going to fly back up there and pick up that camera I left there."
Neil Armstrong

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1  One will see erroneous articles of Neil Armstrong being the first man to "land" on the Moon.  An error because both Neil Armstrong and Edwin "Buzz" Aldrin were in the Apollo Lunar Module, Eagle, when she landed on the lunar surface.

2  "Post-flight analysis indicated that Neil landed with about 770 pounds of fuel remaining." ... "the remainder would have been enough for about 45 seconds, including about 20 seconds for an abort"

See also:
The 40th Anniversary of the Apollo 11 Moon Landing. Why Bother With Columbus Day??

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ChannelAdvisor Fined $150,000 For Unlicensed Microsoft Software

ChannelAdvisor Fined $150,000 For Unlicensed Microsoft Software
07 August 2012
EventHorizon1984

 

CEO Scot Wingo's ChannelAdvisor made the news late last week.  For a "private software-as-a-service company", which has eBay as an investor, it was rather embarrassing news.

• ChannelAdvisor pays $150K in software settlement, by Lauren K. Ohnesorge
• "Morrisville-based ChannelAdvisor has agreed to pay $150,000 to settle claims that it had pirated software installed on its computer."
• "ChannelAdvisor had also agreed to delete from its computers all unlicensed software, to acquire any licenses necessary to be compliant and to take measures to ensure the situation won’t happen again."

ChannelAdvisor's response to the Business Software Alliance findings and fine, were as usual professional and to the point.  As stated by ChannelAdvisor General Counsel Scot Alridge:

• ChannelAdvisor pays $150,000 to settle software dispute, by WRAL Tech Wire
• "As a software vendor ourselves, we take licensing very seriously"
  "ChannelAdvsior underwent a voluntary internal audit after BSA brought to our attention a potential shortfall in one of our software licenses."
  "We found that we had acquired an insufficient number of licenses to support our recent growth."

The formal response from the Business Software Alliance was equally cut and dry:

• "ChannelAdvisor agreed to pay $150,000 to settle claims that it had unlicensed copies of Microsoft software installed on its computers. The company also agreed to delete from its computers all unlicensed software, acquire any licenses necessary to become fully compliant, and take measures to ensure its future compliance, one of the foundational principles of proper software asset management (SAM)."

Essentially a slap-on-the wrist, at least for a company that secured $20 million in funding and had "recent growth", because the penalties could have been much worse.

• Business Software Alliance:  "Unauthorized file-sharing of copyrighted work consumes system resources and violates federal law. The liability and risk involved with using pirated software now reach far beyond copyright infringement, and its $150,000 penalties per violation. Pirated software can now result in Sarbanes-Oxley violations, which can mean millions in fines and as much as 20 years in prison for executives."

At this point you're asking, 'who is the Business Software Alliance', and why would anyone answer to them?

• "The Business Software Alliance (BSA) is the voice of the world's software industry and its hardware partners on a wide range of business and policy affairs."
• "BSA is the largest and most international IT industry group, with policy, legal and/or educational programs in 80 countries."

BSA's members include notables Adobe, Apple, AVG, CA Technologies, Intel, Intuit, McAfee, Microsoft, Sybase, Symantec.

Or put another way, BSA's clout can be measured in the billions of dollars of corporate legal services their members can bring to bear.

How did extra unlicensed copies of Microsoft software get installed on secure computers without following, one presumes, a set-in-stone corporate procedure?  We'll leave the reader and ChannelAdvisor to ponder that question.

As to how BSA found out about the unlicensed software?  Anonymous tip.

The Business Software Alliance has a page for submitting tips:

• BSA - Report Piracy Now:  Report

With rewards for tips:

• "A reward may be payable only if BSA pursues an investigation and, as a direct result of the information provided by you, receives a monetary settlement from the reported organization. The amount you may receive is based on a sliding scale as outlined in the Terms and Conditions available on the BSA website."

According to BSA, a settlement paid by a company of $100,001 to $200,000 earns a potential reward of "Up to $10,000".

Not a bad reward for filling out an anonymous tip report. 

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"Tsk. Tsk. Tsk."
Fred Flintstone, The Flintstones:  Fred's Second Car (8 January 1965)

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The Checks Were In The Mail - CLRB Hanson LLC et al. v. Google

The Checks Were In The Mail - CLRB Hanson LLC et al. v. Google
01 August 2012
EventHorizon1984

Were you one of those affected by the CLRB Hanson Industries, LLC et al v. Google Inc. class action lawsuit?  A case that had been winding it's way through the Court system since 2005?

Well, wait no more.  Were you marginally affected by this class action, and filed out the online paperwork, you and your company should have received the settlement checks.

Like these (redacted images:

I'm (Ed.) framing these.

However this copious bounty pales in comparison to the multiple settlements eBay/PayPal due (us).  Like this action (redacted) from 2004:

To date, the total of all eBay/PayPal settlements paid is $0.00.

Perhaps not coincidentally, the settlement checks from a HP class action suit are "pending".  After all the new HP CEO, Meg Whitman, was the eBay CEO during the PayPal class action lawsuit.

We expect nothing less from the same manager.

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"All this happens Real Soon Now."
Jerry Pournelle

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