eBay dot com insanity lives ! - www.ebay.com

1. [verwijderd] 25 april 2003 06:18

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   Reuters
   As eBay grows, so does debate on stock valuation
   Wednesday April 23, 4:35 pm ET
   By Lisa Baertlein
   
   PALO ALTO, Calif., April 23 (Reuters) - One day after posting earnings and revenue that more than doubled, online auction house eBay Inc. (NasdaqNM:EBAY - News) said it would also double its Silicon Valley real estate holdings.
   
   The announcement proved a relief for San Jose, California, officials who lobbied to keep the eBay from leaving the home of the Internet revolution.
   
   But the expansion comes amid a simmering debate over whether eBay's gravity-defying stock price is a recognition of its unstoppable growth prospects or a vestige of the irrational exuberance that once also dictated the fortunes of Silicon Valley neighbors.
   
   EBay, which has become the venue of choice for the sale of everything from jets to downtrodden California towns, saw its shares jump almost 6 percent to $94.32 on Wednesday, their highest level since May 2000.
   
   The stock has bolted higher by almost 40 percent to trade at more than 74 times forecast 2003 earnings -- a valuation four times richer than the broad market.
   
   Another way to think about it is this: EBay's market cap is nearly $29.3 billion -- roughly one-eighth that of Wal-Mart Stores Inc., which as the world's biggest retailer has more than 200 times eBay's annual revenue.
   
   Analysts who follow eBay are split into two camps: those who say the stock price can continue to march higher as the company expands its global reach and those who say it is already priced to perfection.
   
   On Wednesday, Pacific Growth Equities analyst Derek Brown said in a client note that eBay's stock was fully valued. "We see few obvious meaningful catalysts," he wrote.
   
   Deutsche Bank Securities' Jeetil Patel is on the other side of the debate. He has a buy "rating" on the stock and a target price of $105.
   
   EBay has been one of the few bright spots in a market battered by economic weakness, war and terrorism jitters, and corporate scandal.
   
   On Tuesday, it boosted 2003 earnings and revenue targets and posted first-quarter profits that surged 119 percent from a year ago on triple-digit international growth.
   
   The company also reported strong results from its recently acquired online payment unit, PayPal. Revenues, which were up 94 percent overall, would have risen 56 percent even without PayPal's $94.2 million contribution.
   
   "I don't think anyone would dispute the eBay has a fantastic business model ... there are lots of things to like," said Ken Broad, a portfolio manager at Transamerica Investment Management in San Francisco.
   
   Nevertheless, Broad has a different take on eBay's valuation. He said the biggest the risk to investors lies in eBay's heavy use of employee stock options.
   
   If eBay had expensed employee stock options based on their market value, its 2002 earnings would have been cut by 75 percent to 21 cents per share from its reported per-share profit of 85 cents, the company said in a footnote to its annual report.
   
   When options expenses are added to the equation, Broad said, "valuation goes from expensive to almost insane."
   
   Silicon Valley high-tech companies, which have used options to compensate employees more than other industries, are lobbying hard to stop an investor-led move toward mandatory stock option expensing.
   
   The Financial Accounting Standards Board, which sets accounting standards in the United States, recently voted to go ahead with plans to determine how to expense employee stock options.
   
   As the stock options battle rages, growth-starved investors continue to flock to eBay.
   
   "In general, with investor psychology, hope springs eternal," Broad said.
   
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2. [verwijderd] 25 april 2003 06:23

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