Blog Post

Is eBay Ready To Make A Big Move?

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

[qi:013] An interesting tidbit about eBay: last week, the auction giant boosted its existing credit facility from $1 billion to $2 billion, with an additional billion dollar option. This could mean something major is up. Stifel Nicolaus analyst Scott Devitt writes in a note:

eBay is positioning for a possible material event regarding its capital structure or a mostly cash-funded acquisition. As for a dividend, while it is possible it is not likely….eBay could repurchase 18% of its equity over the next two years with its existing cash…We continue to believe in this scenario, although we recognize that an acquisition that would allow eBay to marry distribution with content is always a possibility

Interesting! Time to start digging up dirt! What do you think eBay is upto? Buying Yahoo or something equally radical?

16 Responses to “Is eBay Ready To Make A Big Move?”

  1. With an extended credtit of $1 billion and a further $1 billion option then something major sounds like an under estimation to me.
    What could ebay be upto? Time will tell I suppose.I can’t help but think back to Google and the YouTube acquisition though.

  2. They might be looking into a play (with partners)for a Broadband Network by participating in the 700Mhz Auction. WOuld be nice to have access to and control of the Last Mile.

  3. here is the thing. Borrowing money and repurchasing stock is one way to prop up the stock pricing. Remember the CFO is from EDS, an industry where debt is used extensively to create shareholder value. Leveverage also keeps crazy LBO shops away.

  4. Andrew, I agree with the idea of borrowing money when you don’t need it but they already had $1B available that would buy a lot of StumbleUpons. Now they can borrow up to $3B. The stock is up 3.4% as of this post so my guess is the market thinks something big is happening also. I think so also.

  5. I agree with Andrew, and I’d go farther with that thought. One of the frustrations of spring 2002 for those in management (i.e. not me) was not having the cash to make acquisitions. I think that eBay expects to see some cheap assets available if the market crashes. Cheap assets could be anything from companies with valuable brand names like Yahoo! to cheap data centers you’ve never heard of.

  6. A dividend is so unlikely as to be not worth mentioning.

    They’ve spent billions over the last few years propping up their stock — it hasn’t worked.

    A big acquisition like Yahoo is conceivable, I guess. I strongly suspect they’re going to use the dough to go after a bunch of smaller fish ranging in size from StumbleUpon to Skype.

    At some point soon they’re going to need to articulate a vision for all this and state categorically that auctions and online commerce are just one element of what they do in the future — otherwise the market will continue to punish them when they make money as an internet conglomerate (via Skype, PayPal etc.) while the auction market in the US and EU remains saturated.

  7. Robert Dewey

    …finally making the leap and taking over Craigslist?

    Their acquisitions are very hard to predict – one acquisition is about entering into the communication sector, while another acquisition is about entrenching themselves further into the online marketplace.

    It’s really hard to say what they are up to.