Why Apple, Google And EBay Will Slash And Burn Investors

Jun. 27 2011 - 12:28 pm

snippet, emphasis mine:

EBay (EBAY):  Over the long term I think that EBAY has the opportunity to be mediocre at best and obsolete at worst. The company has done little to diversify away from being an online auction site. Whereas a company like Amazon.com (AMZN) that used to be 100% consumer driven 10 years ago is now a leader in cloud computing and dominates the Internet in more than one way. EBAY is still that place where you can buy baseball cards and sell old pairs of jeans.

Very simple here: The company has been steadily losing market share over the past few years. This is a trend that will be difficult to reverse as it isn't positioned well internationally. Domestically, it doesn't have the innovation to differentiate itself from the millions of different options consumers have for bargain shopping on the Internet.

The answer for EBAY is simple: Spin-off its Internet payment business. It dominates the marketplace and has no business being attached to its auction business. Allow the Internet payment business to flourish. Focus on wireless initiatives within that business. By keeping its Internet auction business and Internet payment business together, it will only stifle growth and innovation in the one bright spot that the company seems to have.

Keep things as they are and the company will be wearing a capital "L" (for Loser) on its forehead for sometime to come.