eBay Inc.

Company Profile
Publication Date: 21 Apr 2008

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...................................................................eBay Inc.................4 SWOT Analysis................................................................................................................................................5 eBay Inc....................................4 Key Facts............... TABLE OF CONTENTS TABLE OF CONTENTS Company Overview........................ © Datamonitor Page 3 ......

KEY FACTS Head Office eBay Inc. The operating profit of the company was $613.9% over 2006.672.500 people.3 million in the fiscal year ended December 2007. The company is headquartered in San Jose.5% over 2006. a decrease of 56.3 (USD Mn) Financial Year End Employees NASDAQ Ticker December 15.eBay Inc. The net profit was $348. online payments services and online communications offerings to individuals and businesses.1% over 2006. © Datamonitor Page 4 . a decrease of 69.500 EBAY eBay Inc. It also provides platforms. The company recorded revenues of $7.com Phone Fax Web Address Revenue / turnover 7.ebay.2 million in the fiscal year 2007. eBay 2145 Hamilton Avenue San Jose California 95125 USA 1 408 376 7400 1 408 369 4855 http://www.3 million in the fiscal year 2007.672. Company Overview COMPANY OVERVIEW eBay is an online company that provides online marketplaces for the sale of goods and services. California and employs around 15. an increase of 28.

hacking or unauthorized access to computers has resulted in losses to companies and their customers. provides a competitive advantage and gives eBay considerable bargaining power. eBay’s major business operations are web-based. Such instances of attacks make the company vulnerable. However. Strong market position provides competitive advantage and better visibility to the company.6 million listings are added per day. eBay has a strong market position. and associated strong market position.eBay Inc. the company was ranked 43rd with a brand value of $12. This could have an adverse effect on its credit card sales as consumers would hesitate to provide their personal information. the number of active users on various eBay. Strengths Strong market position Business model Strong revenue growth Opportunities Growing search engine advertising Growth in online retail spending Acquisitions Weaknesses Declining operating margin Litigations Threats Intense competition Hacking and spoofing Rising labor wages Strengths Strong market position eBay has a strong market position. Business model eBay Inc. and also erode customer confidence. As of 2007. with operations in 28 countries.927 million in 2007. and approximately 6. © Datamonitor Page 5 . It is one of the largest global online auction website. In brand value rankings. At any given time. A strong customer base. SWOT Analysis SWOT ANALYSIS eBay is an online company which provides online marketplaces for the sale of goods and services and other online commerce. there are approximately 100 million listings on eBay worldwide. It also provides platforms. eBay has 222 million registered users. The company was ranked 383rd in the list of America’s largest corporations in 2007 by Fortune magazine. online payments services and online communications offerings to individuals and businesses.com platforms was approximately 83 million as compared to approximately 82 million at the end of 2006.

The simplicity and flexibility of this model has enabled eBay to increase the number of members and hence increase its revenue base. eBay's sales and marketing. Strong revenue growth The company's revenues have shown a significant increase in the last few years. Netcraft filed a lawsuit against eBay alleging that eBay and PayPal infringed two of its patents entitled ‘Internet billing methods. and used and vintage items. Strong revenue growth would help the company in maintaining its leading position in the market. Litigations eBay has been involved in various litigations in the past years. This increase was due to the strong performance across all reportable segments. which would otherwise be difficult to locate and purchase. end-of-life products. StubHub. a subsidiary. general and administrative expenses increased to $5.8% in 2006 and 8% in 2007. which tend to be fragmented and offer a relatively limited variety of goods. for monopolizing markets through various anticompetitive acts and tying arrangements. © Datamonitor Page 6 . the company's total revenues increased at a CAGR of 13%. This business model also saves on the transaction costs per sale. SWOT Analysis eBay operates on a unique business model which unites buyers and sellers in an online marketplace.2 million in the fiscal year 2007 compared to $3. In February 2007. a case was filed against eBay and PayPal. During 2005-2007. was sued for violating the Fair and Accurate Credit Transaction Act because it.7 million in fiscal 2005 to $7.’ Flexiworld Technologies filed a lawsuit against eBay eBay Inc. Expenses as a percent of net sales increased to 69% in the fiscal year 2007 compared with 55.672. allegedly. The rising expenditure has impacted the company's margins which resulted in its operating margin declining from 31. In particular. A declining operating margin indicates a weak cost structure and could adversely affect the company's long term financial position.3 million in fiscal 2007.7% in 2005. In March 2007. This business model overcomes the inefficiencies of traditional marketplaces. Weaknesses Declining operating margin The company’s operating margins declined. largely due to increasing operating cost pressures. due to absence of intermediaries. this model has been successful in addressing markets of new and scarce goods.4% in the fiscal year 2005. printed receipts containing more than the last five digits of a credit card number or the expiration date of a credit card by showing the same on an on-screen receipt.969. In May 2007.eBay Inc.296. to 23. product development. another subsidiary. For instance.290 million in the fiscal year 2006. from $5.1% in the fiscal year 2006 and 50.

Gumtree. Growth in online retail spending Online shopping is steadily growing in popularity in the US.com to enable professional trading on eBay. Expansion of operations by acquisitions would increase the company’s visibility and market penetration. During the second quarter of 2005. Search engine advertising is expected to grow at a CAGR of 15% from 2006 to reach $13.com. © Datamonitor Page 7 . In February 2007. Rent.nl. search is likely to account for 47% of online advertising budgets. Marktplaats. Increasing online advertising spending will enable eBay to increase its revenues and to improve profitability. Threats eBay Inc. The US online retail sales are expected to grow annually by 17% in 2007-2008. SWOT Analysis alleging that Skype infringed its patent titled ‘Apparatus. The US online retail sales have been estimated to have grown from $104 billion in 2005 to $130 billion in 2006.com. The online retail sales in the US are expected to reach $329 billion in 2010. Acquisitions eBay made many acquisitions in the recent years.1 billion in 2010. and Systems for Anonymous Communication’ in October 2007. Shopping.com. CSC Holdings.com. total online accounting for approximately $7. This in turn would increase eBay’s market share and boost its revenues. for an aggregate transaction value of approximately $75 million in May 2007.’ These litigations could have a material effect on the company’s profits. In December 2007.de and other online marketplaces in October 2007. GotVoice and Simulscribe infringed Klausner’s patent titled ‘Telephone Answering Service Linking Displayed Data with Recorded Audio Message. investors’ confidence and could also result in negative publicity for the company.com. mobile. a leading online marketplace in Turkey in May 2007. Opportunities Growing search engine advertising Search engine marketing is currently the largest segment within online advertising. an early-stage company that helps people discover and share content online. a leading auction management software company in Germany that operates Afterbuy. eBay acquired StumbleUpon.2 billion in 2006. Half. Methods. eBay acquired StubHub. Kijiji. eBay acquired a minority stake in GittiGidiyor. up from 42% in 2005. OpusForum. AT&T Mobility. AT&T. The company could further improve its online services by expanding its offerings and gain from the expected growth in online sales. By 2010. LoQUo.eBay Inc. Comcast. Apple. e-commerce sales grew 26% as compared with the same period of the previous year. eBay acquired ViA-Online.com.de and StubHub.com. eBay facilitates online shopping through its websites such as eBay. Klausner Technologies filed a lawsuit alleging that eBay.

government mandated increases in minimum wages and a higher proportion of full-time employees are resulting in an increase in labor costs.2 million credit and debit card numbers. In recent times.500 employees are located in the US. About 94 million customers’ credit and debit card details were stolen. primarily Amazon. there was an exponential increase in website defacement. grocery stores in the New England suffered a theft of an estimated 4. Out of this. out of which approximately 80 million were due to hacking attacks. there are a number of niche businesses that directly compete with the company such as Autobytel (new and used cars). This could have an adverse effect on eBay’s credit card sales as consumers would hesitate to provide their personal information.com has recently launched an online auction business. which could materially impact the company's results of operation.000 customers was stolen from Advance Auto parts.com. data of more than 56. in January 2007.15 per hour since 1997.eBay Inc. In addition. Rising labor wages Labor wages are rising in the US. Over 140 million records of various companies have been compromised from February 2005 to January 2007. The federal minimum wage rate in the US.500 employees across the company as of December 2007. which was entered by Yahoo in 1999.3 million users was stolen from US job website Monster. Hacking and spoofing Hacking or unauthorized access to computers all over the world has resulted in major losses to companies and their customers. The company estimated its liability for the breach to be $118 million after tax charges in the second quarter of the fiscal year 2008. eBay has been slow to infiltrate the Hong Kong market. Such instances of attacks make the company highly vulnerable and also have a bearing on the customers’ confidence. 9. The federal minimum wage rate is further expected to rise to $6.5 million websites all over the globe. eBay employs approximately 15. Overstock. eBay’s major business operations are web-based. tight labor markets. TJX suffered an unauthorized intrusion into its computer systems that process and store information related to customer transactions. Increased competition from established players such as Yahoo could erode eBay's market share and reduce its profitability.55 an hour in July 2008 and then to $7. increased overtime.85 per hour from July 2007. data of over 1. the company still competes with other ecommerce companies. TJX expects to incur future non-cash charges of approximately $21 million (after tax). has increased to $5. According to the Computer Security Institute and San Francisco Federal Bureau of Investigation’s Computer Crime and Security Survey. The company's success depends on its ability to attract and retain eBay Inc. in 2007. For instance. In 2008. for business. 2005.25 an hour effective July 2009. SWOT Analysis Intense competition Although eBay is the dominant player in online auctions. Hannaford Bros. Also. © Datamonitor Page 8 . which had remained at $5. In addition. It is believed that the top 50 attackers defaced approximately 2. In addition. Also in 2008. Further.

eBay Inc. © Datamonitor Page 9 .eBay Inc. Increased labor costs in the US could increase overall costs. SWOT Analysis efficient employees in all segments of its business. resulting in a decline in its profitability.

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