Sunday, January 21, 2007

eBay to Announce Q4 Earnings Jan. 24th

The first data is coming out regarding eBay's 4th quarter. Here is an article on FCF (Free Cash Flow) at eBay. Some key comments are:

"However, challenges at eBay are not subsiding, but growing. The company is spending more and more -- mostly paying Google (GOOG), a chief competitor -- to draw traffic to the site, but rumblings are still surfacing that new listing numbers may have been disappointing in quarter four.

When expenses start to increase more than free cash flow, it suggests that a company's competitive moat is under attack -- which is definitely the case at eBay. When management announces results on the 24th, they need to assure investors that eBay can grow more than it has in the recent past despite a need to increase spending.

Right now, risk in the stock appears to be at best on par with the potential reward, if not greater. In other words, shareholders are betting that eBay can overcome growing odds and continue to maintain its valuation, if not grow it, but by the numbers the risks appear greater than the potential rewards."