Buy Proposal: eBay

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Buy Proposal eBay

• 10/5/2006

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What is eBay?

• Online Marketplace
• Virtual Bank
• Communications Firm

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Chart
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Stock Option Expenses

• While the company has seen revenue grow 30 in
  the 2nd quarter the company has had greater
  expenses due to changes in stock option expensing
  rules.
• Turnaround Time!

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Why the Decline?

• Shares have fallen since January of last year as
  growth has started to slow.
• Growth in the number of new listings has grown
  only about 31 on a year over year basis
• People have been worried that Google and Yahoo!
  are taking away eBay territory.

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Still Room For Growth

• Overseas operations
• Diversification of the online market
• Shops
• Yahoo has teamed up with eBay
• Services Provided

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Partnerships

• eBay has signed contracts with Yahoo!
• Yahoo in the US.
• Google outside the US, complementary ads, not to
  hurt eBay
• Amazon (main competitor) no such partnership
  agreements yet
• Loser MSFT

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Power

• 345 Million Searches on eBay a day
• 114 Million PayPal accounts
• Shopping.com
• Top 10 global eCommerce website

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Financials

• Little Long Term Debt
• 1 Billion in Profit for 2005 on Revenue of 4.5
  Billion
• 2 Billion Stock Buy Back

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Portfolio Risks

• Large Cap exposure to Technology
• Needed
• Any new idea could erode market share instantly,
  but eBay does have brand name appeal
• Can Skype add Value? There are over 113 million
  registered users, but Skype hardly makes

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Proposal

• Buy 175 shares of eBay (about 5,000)