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Stocks E / eBay, Inc.
|Subject: CEO feeling good||Date: 10/19/2012 10:00 AM|
|Author: newsreporter||Number: 25762 of 25836|
Analysts May Be Neutral, but eBay CEO Donahoe Is Feeling Good
Not bad. Nice. Solid. Not exceptional. Prudent.
Those are all words being used to describe eBay’s third quarter. But while the analysts are skeptical about whether eBay can keep up the growth it has enjoyed over the past two years, CEO John Donahoe says he’s feeling better about the company than he has in a while.
“The company is in the strongest position it has been in for many years,” Donahoe said in an interview. “And I think with what’s happening in the world of commerce, it plays well to our strengths and capabilities. I think we are a stronger company, more innovative and more customer-focused and getting better every day.”
In the third quarter, eBay hit the high end of its guidance and raised its outlook for the year, but since it has a track record of beating forecasts by a lot, analysts were hesitant to call the quarter a home run.
Mark Mahaney of Citi, which has a “neutral” rating on the stock, called eBay’s results “solid, but not exceptional,” and “slightly soft” because “this company has exceeded the high-end of its guidance for eight straight quarters.” Colin Sebastian of Baird Equity Research, who has an “outperform” rating and a price target of $58, was also reluctant to say the company was on fire: “Although management raised the implied guidance range for Q4, the midpoint of revenue guidance is slightly below consensus, which we believe is prudently cautious at this point ahead of the holiday spending ramp.”
In reaction to analysts’ neutral stance on the stock, Donahoe said: “We’ve beaten our guidance every quarter for I’m not sure how many quarters — and we beat it again this quarter. We are having a strong year, and our share price is up for the year, but you know how it is, there’s always a hope that it goes higher and higher. Our growth rates have been very steady; we don’t overly worry about that.”
During the company’s conference call yesterday, Donahoe confirmed rumors that PayPal is undergoing a restructuring, which could result in layoffs. He said the new structure is designed to consolidate its product groups from nine to one. “Here’s the way to think about it — customers want a seamless experience across the Web, online and offline,” he said. If that’s the case, then those product groups should not be separate. He reiterated that it has nothing to do with cost reductions. “While it’s true there will be reductions, we are committed to accelerating the pace of innovation,” he said. “We aren’t seeking cost reductions — this is 100 percent about streamlining the creation of great products.”
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