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Charles Schwab EBAY INC
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1. Charles Schwab EBAY INC News Impact Report Prepared February 04, 2009 NASDAQ Symbol: EBAY News Stories Provided by STANDARD & POOR'S News can have a big impact on a stock. As you look at the chart, you can use the letters to match the stock's daily activity with the corresponding news stories below. Daily open, high, low, and closing prices T-P- N- J- F- C- US O M I H G E BA $19 $19 18 18 17 17 16 16 15 15 14 14 13 13 12 12 11 11 10 10 13 20 27 03 10 17 24 01 08 15 22 29 05 12 19 26 02 October November December January Daily Trading Volume (Millions) 50 50 25 25 0 0 A. 1/26/2009 S&P MarketScope, Stocks In News... 11:12 am ET the company posted $8.54 billion in revenue, net income on a ... S&P REITERATES BUY OPINION ON SHARES OF EBAY GAAP basis of $1.78 billion or $1.36 per diluted share (EBAY 12.01****): After reviewing EBAY's recent Q4 '08 compared to net income of $348 million or $0.25 per share on results and Q1 '09 guidance, we are lowering our '09 EPS revenues of $7.67 billion, for the same period of last year, and estimate to $1.36 from $1.57 and set '10's at $1.63. Our non-GAAP net income of $2.24 billion or $1.71 per diluted forecasts are after stock-based compensation expenses, but share compared to net income of $2.10 billion or $1.53 per before amortization costs. We still see EBAY as an attractive share for the same period of last year. The company provided value, despite notable fundamental challenges. For example, earnings guidance for the first quarter of 2009. For the based on comments made during the Q4 conference call, we quarter, the company expects net revenues in the range of continue to think EBAY will pursue the sale of Skype, and we $1.800 to $2.050 billion with GAAP earnings per diluted share think the business could generate value of at least 3-4X our in the range of $0.21 to $0.23 and non-GAAP earnings per '09 sales forecast, or $2.0-2.7B. We keep our target price of diluted share in the range of $0.32 to $0.34. $18. /S.Kessler C. 1/22/2009 S&P MarketScope, Market Movers... EBAY posts B. 1/23/2009 January 21, 2009, eBay Inc. Reports Unaudited $0.41 vs. $0.45 Q4 non-GAAP EPS ($0.29 vs. $0.39 GAAP Consolidated Financial Results for the Fourth Quarter and EPS) on 6.6% lower revenue. Sees $0.32-$0.34 Q1 Year Ended December 31, 2008; Provides Earnings Guidance non-GAAP EPS ($0.21-$0.23 GAAP EPS) on for the First Quarter of 2009... eBay Inc. reported unaudited $1.800B-$2.050B revenue. consolidated financial results for the fourth quarter and year ended December 31, 2008. The company posted fourth D. 1/22/2009 S&P MarketScope, Stocks In News... 09:01 am ET quarter revenue of $2.04 billion, representing a $145 million ... S&P REITERATES BUY OPINION ON SHARES OF EBAY year-over-year decrease due primarily to the impact on eBay (EBAY 13.28****): Before amortization charges, EBAY posts of a stronger dollar and macroeconomic conditions globally. Q4 EPS of $0.37 vs. $0.42, $0.04 above our forecast. PayPal, Classifieds, text and graphical advertising and Skype Revenues fell 7%, reflecting continued weakness in the performed well, growing revenue on a year-over-year basis. marketplaces segment, more specifically the traditional The company recorded net income on a GAAP basis of $367 auction business, offset somewhat by Skype and PayPal. million or $0.29 per diluted share compared to net income of Owing to notable global economic and company-specific $531 million or $0.39 per share for the same period of last challenges, we are lowering our '09 EPS estimate to $1.57 year and non-GAAP net income of $524 million or $0.41 per from $1.63. Given revisions to our DCF model, we are diluted share compared to net income of $611 million or $0.45 reducing our 12-month target price to $18 from $23. However, per share for the same period of last year. For the full year, selling well below our target price, we view EBAY as © 2009 Charles Schwab & Co., Inc. Member SIPC (0498-xxxx) Page 1 (Continued on next page)
Charles Schwab EBAY INC News Impact Report Prepared February 04, 2009 News Stories Provided by STANDARD & POOR'S undervalued. /S.Kessler J. 12/1/2008 S&P MarketScope, Views and News... 09:23 am ET ... EBAY INC. (EBAY 13.13) UNCHANGED, STIFEL E. 1/22/2009 S&P MarketScope, Views and News... 11:22 am NICOLAUS CUTS EBAY (EBAY) ESTIMATES, TARGET, ET ... EBAY INC. (EBAY 11.75) DOWN 1.53, EBAY (EBAY) KEEPS BUY... Analyst Scott Devitt cuts ests due to current POSTS $0.41 Q4 NON-GAAP EPS. DEUTSCHE BANK CUTS environment, EBAY's continued biz model challenges. Cuts TARGET... Analyst Jeetil Patel notes while EBAY beat on $2.2B Q4 rev. est. to $2.1B, maintains adj. EPS at $0.40. Cuts EPS, every other metric came in weaker than expected: gross $9.0B '09 rev. est. to $8.8B, $1.78 adj. EPS to $1.69. Notes in merchandise volume fell 16% y/y, revs -7%, op. profits -12% 4-year period, EBAY's main marketplace biz has gone from y/y. Says unwind of model started as top-line declines likely being core of eCommerce industry to more of a niche affect profits due to fixed costs. With no improvement in biz to marketplace for unique and collectible items. Says EBAY date, thinks EBAY should move to fixing issues that have trying to make its way back toward relevance with its diamond been building for years, incl: increasing demand, lower seller seller program, software platform dubbed Large Merchant commissions, re-investing in buyer interface. Cuts $1.46 '09 Services. Cuts $20 target to $17./Brodie pro forma EPS est. to $1.40, $13 target to $11. Reiterates sell./B.Brodie K. 12/1/2008 S&P MarketScope, Market Movers... DOWN 0.20 to 12.93... Stifel Nicolaus cuts estimates, target on EBAY. F. 1/14/2009 S&P MarketScope, Market Movers... DOWN 0.97 Maintains buy.... to 13.16... Collins Stewart reportedly initiates coverage on EBAY with sell. L. 12/1/2008 S&P MarketScope, Stocks In News... 09:59 am ET ... S&P REITERATES BUY OPINION ON SHARES OF EBAY G. 1/14/2009 S&P MarketScope, Views and News... 03:39 pm INC. (EBAY 12.91****): Today is Cyber Monday, online retail's ET ... EBAY INC. (EBAY 12.92) DOWN 1.21, COLLINS version of Black Friday, and we expect notable related STEWART INITIATES COVERAGE OF EBAY INC (EBAY) customer searching, browsing and purchasing activity. Our WITH SELL... Analyst Sandeep Aggarwal says stock up quick survey across the Internet, including shop.org's nearly 30% from recent low: believes this irrational, as co.'s CyberMonday.com, indicates substantial promotional activity growth profile down materially; EBAY losing market share; around free shipping, and discounts of up to 60%. We believe icore Marketplaces biz matured, has structural problems; '09 that online retail sales will be roughly flat with last year, but retail outlook gotten worse. Expects almost flat '09 top-line related margins will be challenged at best. We think growth. Thinks online advertising will come under tremendous consumers will gravitate towards better known and more pressure in '09. Believes Marketplaces revitalization, Bill Me stable businesses, including those owned by companies like Later ramp-up will not see fruition until '10-'11. Sees $1.69 '08 EBAY. /S.Kessler pro forma EPS, $1.62 '09. Sets $10 tgt. Says sell EBAY, buy AMZN./L.Bissell M. 12/1/2008 S&P MarketScope, Stocks In News... 10:11 am ET ... RETRANSMIT - S&P REITERATES BUY OPINION ON H. 1/7/2009 January 5, 2009, Margaret Whitman Resigns as SHARES OF EBAY INC. (EBAY 12.83****): Today is Cyber Director of eBay Inc.... eBay Inc. announced that on Monday, online retail's version of Black Friday, and we expect December 31, 2008, Margaret Whitman, director notified the notable related customer searching, browsing and purchasing company that she would resign from the company's Board of activity. Our quick survey across the Internet, including Directors effective immediately. Ms. Whitman's position with shop.org's CyberMonday.com, indicates substantial the company as Special Advisor to the President and CEO promotional activity around free shipping, and discounts of up also terminated as of December 31, 2008. Ms. Whitman's to 60%. We believe that holiday season online retail sales will decision to resign is solely for personal reasons and time be roughly flat with last year, but related margins will be considerations and did not involve any disagreement with the challenged at best. We think consumers will gravitate towards company. better known and more stable businesses, including those owned by companies like EBAY. /S.Kessler I. 12/8/2008 December 4, 2008, eBay Promotes Torsten Schuppe as Chief European Marketer... eBay Inc. has N. 10/17/2008 October 15, 2008, eBay Inc. Reports Earnings promoted UK marketing director Torsten Schuppe to the role Results for the Third Quarter of 2008; Provides Earnings of chief European marketer. The move is part of a restructure Guidance for the Fourth Quarter of 2008... eBay Inc. reported of its marketing operations that will also see the division earnings results for the third quarter of 2008. For the quarter, moved to Switzerland. The new marketing team will be the company reported earnings of $492 million, or 38 cents a responsible for all internet and retention marketing across share, compared to a loss of $936 million, or 69 cents a Europe, including search, direct marketing, email and on-site share, in last year's quarter, which included a hefty goodwill advertising. The new European marketing team is expected to impairment charge. Excluding certain items, the company work alongside eBay's international advertising division, posted earnings of $592 million, or 46 cents a share. Revenue already based in Switzerland and headed by Christian Kunz. was $2.12 billion. The company provided earnings guidance The data in this report has been obtained by Charles Schwab & Co., Inc, ("Schwab") from sources believed to be reliable. However, because of the possibility of human or mechanical error, Schwab gives no assurance to the accuracy, adequacy, or completeness of the data. Schwab does not recommend any particular equity or give any assurance to the suitability or potential value of any particular equity investment or information source. Schwab encourages customers to use a variety of data before making an investment decision. News Copyright © The McGraw-Hill Companies, Inc. This investment analysis was prepared from the following Sources: S&P MarketScope, S&P Compustat, S&P Stock Guide, S&P Industry Reports, Vickers Stock Research, Inc., Standard & Poor's, a division of The McGraw-Hill Companies, 25 Broadway, New York, NY 10004. © 2009 Charles Schwab & Co., Inc. Member SIPC (0498-xxxx) Page 2 (Continued on next page)
Charles Schwab EBAY INC News Impact Report Prepared February 04, 2009 News Stories Provided by STANDARD & POOR'S for the fourth quarter of 2008. For the fourth quarter, the an '09 P/E of 8.6X. /S.Kessler company expects revenue to range between $2.02 billion and $2.17 billion and earnings in the range of 39 cents a share to S. 10/16/2008 S&P MarketScope, Stocks In News... 02:06 pm 41 cents a share. ET ... S&P REITERATES SELL OPINION ON ADSS OF GMARKET (GMKT 19.23**): During eBay's (EBAY 14.21****) O. 10/17/2008 October 15, 2008, eBay Inc. Reports Q3 conference call yesterday, it acknowledged considering Consolidated Earnings Results for the Nine Months Ended taking an equity stake in GMKT, the recent receipt of a September 30, 2008; Provides Earnings Guidance for the favorable related ruling from Korean regulators. However, Year 2008... eBay Inc. reported consolidated earnings results EBAY indicated it has no immediate plans to make such an for the nine months ended September 30, 2008. For the investment and would do so only in a disciplined way. period, the company reported net earnings of $1,412.28 Moreover, our sense is that even if EBAY eventually took a million, or $1.07 per diluted share on net revenue of $6,505.41 considerable stake, it could buy nearly a majority share from million compared to a loss of $182.63 million, or $0.13 per two major holders, and the outstanding ADSs would perhaps diluted share on revenue of $5,491.72 million in last year's not be involved in such transactions. We continue to see same period. The company provided earnings guidance for GMKT as overvalued. /S.Kessler the year 2008. For the year, the company now expects net revenues in the range of $8.525 to $8.675 billion with GAAP T. 10/15/2008 S&P MarketScope, Views and News... 10:45 am earnings per diluted share in the range of $1.32 to $1.34 and ET ... EBAY INC. (EBAY 16.12) DOWN 1.62, MERRILL non-GAAP earnings per diluted share in the range of $1.69 to DOWNGRADES EBAY (EBAY) TO UNDERPERFORM FROM $1.71. NEUTRAL... Analyst Justin Post tells salesforce while his $1.87 '09 EPS est. only modestly below $1.90 consensus, P. 10/16/2008 S&P MarketScope, Market Movers... EBAY posts with gross merchandise value (GMV) on threshold of $0.46 vs. $0.41 Q3 non-GAAP EPS on 12% rise in net declining, EBAY faces increasing need to restructure revenue. To reflect current business trends, impact of high-margin marketplace to drive growth given ongoing acquisitions, impact of reorganization of co.'s workforce now slowdown in transactions. Notes further restructuring of seller expects net revs of $8.525B-$8.675B with GAAP EPS of fees (lowering take rates) to attract larger sellers (i.e., $1.32-$1.34 (incl. restr. charge) and non-GAAP EPS of Buy.com), or a technology upgrade to better compete with $1.69-$1.71. JP Morgan reportedly downgrades to neutral other platforms (AMZN) could drive marketplace margins from overweight. lower than current ests. Has $19 price objective./Brodie Q. 10/16/2008 S&P MarketScope, Views and News... 09:13 am U. 10/15/2008 S&P MarketScope, Market Movers... DOWN 1.67 ET ... EBAY INC. (EBAY 15.33) UNCHANGED, EBAY (EBAY) to 16.07... Merrill downgrades EBAY to underperform from POSTS Q3. JP MORGAN CUTS TO NEUTRAL FROM neutral. Co. unavailable.... OVERWEIGHT... Analyst Imran Khan believes co.'s biggest challenge is an inferior technology platform, which makes it V. 10/7/2008 October 6, 2008, eBay Announces Executive difficult for co. to compete with other eCommerce platforms. Changes... eBay Inc. announced it has acquired Den Bla Avis Says if co. doesn't deliver meaningful improvements in search and BilBasen, providers of online classifieds sites in Denmark functionality or user function, it will inhibit future growth when for a purchase price of approximately $390 million. Larry Illg, economy recovers. Also, notes non-core growth slowing, general manager with eBay global classifieds, will head conversion rates, margins declining. Thinks there will be little eBay's business in Denmark and will lead the integration of cash available for buybacks. Doesn't think stock should trade Den Bla Avis and BilBasen into the global classifieds portfolio. at its SOP as mgmt says it plans to preserve current eBay plans to use its experience in building online structure./Trombino communities around the world to grow user traffic to dba.dk and bilbasen.dk. Den Bla Avis and BilBasen will maintain R. 10/16/2008 S&P MarketScope, Stocks In News... 11:31 am offices in Aarhus and Copenhagen, Denmark. ET ... S&P REITERATES BUY OPINION ON SHARES OF EBAY (EBAY 14.03****): Excluding the impact of non-cash amortization, EBAY posts Q3 EPS of $0.42 vs. $0.34, above our $0.33 estimate that was reduced following the company's mixed preannouncement. Revenues rose 12%, restrained by continuing weakness in Marketplaces, which generated only 4% growth. Non-core Marketplaces operations are seem relatively healthy. Nonetheless, we maintain our '08 EPS estimate of $1.51 and lower our '09 forecast to $1.63 from $1.75. We are cutting our DCF-based 12-month target price to $23 from $27. But we think EBAY is attractively valued with The data in this report has been obtained by Charles Schwab & Co., Inc, ("Schwab") from sources believed to be reliable. However, because of the possibility of human or mechanical error, Schwab gives no assurance to the accuracy, adequacy, or completeness of the data. Schwab does not recommend any particular equity or give any assurance to the suitability or potential value of any particular equity investment or information source. Schwab encourages customers to use a variety of data before making an investment decision. News Copyright © The McGraw-Hill Companies, Inc. This investment analysis was prepared from the following Sources: S&P MarketScope, S&P Compustat, S&P Stock Guide, S&P Industry Reports, Vickers Stock Research, Inc., Standard & Poor's, a division of The McGraw-Hill Companies, 25 Broadway, New York, NY 10004. © 2009 Charles Schwab & Co., Inc. Member SIPC (0498-xxxx) Page 3