Does eBay's Earnings Report Vindicate Management?

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July 16 (Bloomberg) -- Bloomberg's Paul Sweeney, Cory Johnson and Jon Erlichman discuss eBay's earnings and Rupert Murdoch's bid for Time Warner. They speak with Pimm Fox on "Taking Stock." (Source: Bloomberg)

Editor-at-large cory johnson.

Paul sweeney, we want to begin with you.

Let's talk about ebay.

The results today, did they vindicate the company's management strategy?

I don't think so.

It was very much of a mixed bag result in the second quarter.

The bulls and bears are equally split.

What we saw on the second quarter results was generally in-line with expectations.

Expectations were pretty muted, however.

The guidance was little bit on the light side, as carroll mentioned earlier.

That is probably waiting on the stock.

It is not clear to a lot of investors that ebay is a story that can keep up with the overall growth rate of e-commerce, which most people feel like is an excellent long-term story.

What about the calls for ebay to split its paypal business from its online auction and retail business?

You know, it's an interesting question.

Ebay has made the argument, and i think convincingly, that they need to be together because they said the synergies between these companies are so important.

I think one of the reasons we know that ebay was acquiring paypal on the first place was to keep it out of the hands of a competitor, particularly amazon.

The acquisition happened when amazon was making big inroads into ebay's business.

You can look at the way the internet works and e-commerce works as amazon versus ebay, the many sellers on ebay versus the one seller of amazon.

You can look at it the same way, walmart versus small-town america.

Ebay is an enabler of so much other commerce.

The growth rate really jumps out at you.

I'm looking at my model right now.

I've got 19.8% growth of paypal.

It really is growing at leaps and bounds, much faster than the rest of ebay.

Jon erlichman, leaps and bounds for rupert murdoch and his potential acquisition of time warner.

Is this about sports when it comes to time warner and foxx sports -- fox sports?

You can't buy a lot of the stuff that rupert murdoch ones on ebay, at least the standalone purchases.

This is a massive media organization in time warner.

They are not available all the time to a rupert murdoch clearly sees an opportunity, in part because you've got two major deals in washington trying to get approval and comcast buying time warner cable and at&t acquiring directv.

Yeah, it's about sports.

If they can combine the sports rights that channels like tnt and cbs have with the sports that fox already has the rights to, if they can add hbo into the mix, some international assets time warner has, all of a sudden, you're talking about an even more powerful force in this battle of who has the most leverage.

Is it the content players or the distributors?

How do you value and entertainment company like time warner that, as john says, they already have basketball, major league baseball, hbo, but also a lot of other properties like cnn?

How do you do an evaluation?

A lot of times when you look at these diversified media conglomerates, the different businesses have different growth profiles, different profit profiles.

Therefore, the market values them differently.

Looking at this transaction, the marketplace is telling you that fox certainly sees a value, but the stock is not trading above the offer price.

It is really unclear whether there are other bidders out th ere.

We are talking about an $80 billion price tag here.

That really limits the number of buyers out there.

On the media side, it is fox's deal to get done.

I suspect it is simply about price.

I suspect the bankers are going to be working hard over the next several days.

What about competition for this bid by rupert murdoch?

I think that the language that was used by time warner is very interesting.

It is not as if they came out and said, this offer from rupert murdoch doesn't value us at the level we think we are worth.

They basically said they don't want to engage with fox.

Bloomberg news has done some reporting today, which would suggest that time warner isn't interested in selling at this point for the very reason i mentioned at the top, which is that you have two potentially deep-pocketed players tied up in transactions in comcast and at&t. time warner seems to be spinning the message, if they had their way, this would not be the time to sell, but certainly, people mention all the time possible interest from silicon valley.

I think it will be just as interesting to watch to see if this actually leads to deals from other media players may be tepid -- maybe coming together or being swallowed up.

I want to thank you gentlemen

This text has been automatically generated. It may not be 100% accurate.


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