Online auction leader eBay Inc. (NASDAQ: EBAY) is set to report earnings after the close of trading.  The consensus estimates from Thomson Reuters (First Call) are $0.39 EPS on $2.12 billion in revenues.  Because of valuations, we will be paying close attention to its outlook more than its overall review of the ever-important Q4 report of the past.

The company generally does offer guidance, and estimates are $0.40 EPSand $2.1 billion in revenues next quarter and $1.61 EPS and $8.64billion revenues for its Fiscal DEC-2009.  There has been a lowering ofexpectations from analysts, although nowhere near what has been seenelsewhere in Internet and tech stocks.

These forward numbers are an extra risk as there are many concerns overthe constant changes brought up over the model and its sideshow effortslike Skype.  But if the company does not guide down very much for 2009,we will all need to ask ourselves even with no earnings growth if8-times forward earnings sound expensive.

It is no secret nor any bold statement that eBay has lost its lusterand lost its charm as an investment if you have been a holder for verylong.  With a 52-week trading range of $10.91 to $33.47 and with sharesat $12.82 today after a 2% gain, you can see that this has been abrutal stock.

A new CEO has failed to invigorate shares.  The growth is no longerthere, at least not in the U.S.  Now those holding auctions face aneven more skeptical client base that will balk at fee changes.  ButeBay does have what few other online companies have in the U.S.: actualcompetition.  Amazon.com can easily compete against it in the onlinestore front arena, but every other major online auction format is sofar behind that you can’t likely count even 3 other real alternatives.

Options traders are braced for a move of $1.00 or more in eitherdirection, although again consider that there is nearly a month’s worthof time value in that figure.

Its chart is not worth mentioning other than the fact that it is veryclose to a set 52-week low.  Shares also reached $15+ before peteringout on two occasions: once in December and once in early January.  Soit seems that a fairly wide trading band may be in place here as longas nothing major changes in the world.

Analysts are also no longer total cheerleaders here.  It looks like theaverage price target is just north of $16.00 for the year ahead.

Jon C. Ogg
January 21, 2009

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