eBay's Turnaround Stalls, Along with Stock's Upward Mobility

Posted Jul 1st 2010 1:10PM by Brian White

Where is eBay (EBAY) going these days? Sure, the online auctioneer has the same brand power it's had for years, but the transition to bulk discounter from garage-sale auction house hasn't really occurred like CEO John Donahoe wanted it to.

Instead, we see eBay's marketplace still filled with one-off auctions for all kinds of goods (and junk trading hands) along with thousands of Chinese-based bulk sellers selling everything for a few dollars each.

This isn't the turnaround Donahoe wanted after taking over from former CEO Meg Whitman in 2008. To help restore healthy levels of growth, eBay set itself on a mission to become more like a normal online retailer, instead of the auction house that made it a household name. It was risky and, so far, hasn't panned out as planned.

Instead, Donahoe has enraged eBayer after eBayer with constant selling fee changes and other ways to goose more revenue from the site's massive user base to replace a failed turnaround strategy. In fact, once could wonder why Donahoe is still CEO. eBay is not exactly floundering, but it's not living up to its growth potential either, considering its massive brand appeal.

eBay's share price is right under $20, up from $16 a year ago but down from April's 52-week high of $28. In fact, remember the days of December 2007 when eBay stock was riding near $40? It's now half that, in the same tenure in which Donahoe has been in charge. Is the board asleep? Investors need to know.

Search results for many random items this morning showed standard auctions by-and-large instead of many fixed-priced sales -- the opposite of what Donahoe's strategy is. It appears things aren't working as planned at eBay. What's the next shift, Donahoe?

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-- Edited by budnonymous on Thursday 1st of July 2010 10:48:33 PM