eBay, Inc.
Investment Notes
EBAY
Please see disclaimer at bottom of this document
February 24, 2006 Review of 10-K
1. Shares outstanding
| 31-Dec-00 | 1,121,384 | |
| 31-Dec-01 | 1,122,380 | 0.09% |
| 31-Dec-02 | 1,171,280 | 4.36% |
| 31-Dec-03 | 1,313,314 | 12.13% |
| 31-Dec-04 | 1,367,720 | 4.14% |
| 31-Dec-05 | 1,393,875 | 1.91% |
| 17-Feb-06 | 1,406,718 | 0.92% |
2. Number of employees
| Date | Total employees | US Employees |
| 30-Sep-05 | 11,600 | 6,500 |
| 30-Sep-05 | 9,300 | 6,200 |
| 31-Dec-04 | 8,100 | 5,900 |
| 31-Dec-03 | 5,700 | 4,200 |
| 31-Dec-02 | 4,000 | 3,100 |
| 31-Dec-01 | 2,560 | 2,560 |
3. Users
| 1Q03 | 2Q03 | 3Q03 | 4Q03 | 1Q04 | 2Q04 | 3Q04 | 4Q04 | 4Q05 | |
| Registered Users (millions) | 68.8 | 75.13 | 85.5 | 94.9 | 104.8 | 114 | 125 | 135.5 | 180.6 |
| Seq. Growth | 11.50% | 9.40% | 13.50% | 11.00% | 10.40% | 8.80% | 9.60% | 8.40% | |
| YoY Growth | 55% | 47% | 47% | 47% | 52% | 51.40% | 46.20% | 42.80% | 33.28% |
| Active Users (millions) | 31.1 | 34.1 | 37.4 | 41.2 | 45.1 | 48 | 51.7 | 56.1 | 71.8 |
| Seq. Growth | 12.30% | 9.60% | 9.70% | 10.20% | 9.50% | 6.40% | 7.70% | 8.51% | 0.00% |
| YoY Growth | 50.00% | 47.00% | 47% | 47% | 45% | 41% | 38% | 36.17% | 27.99% |
| % of Active Users | 45.20% | 45.40% | 43.70% | 43.40% | 43.00% | 42.10% | 41.40% | 41.40% | 39.76% |
4. cumulative eps
| Fiscal Year | eps as reported | effect on eps if stock options were expensed as compensation (this is not the same as sfas 123r) |
| 1998 | $0.01 | $0.01 |
| 1999 | 0.01 | -0.05 |
| 2000 | 0.05 | -0.09 |
| 2001 | 0.08 | -0.11 |
| 2002 | 0.22 | 0.06 |
| 2003 | 0.34 | 0.19 |
| 2004 | 0.57 | 0.43 |
| 2005 | 0.78 | 0.61 |
| Totals 1998 - 2005 | $2.06 | $1.05 |
5. It looks as though ebay will use up all of her Net Operating Loss Carry-forward's in 2006/2007. From a reporting perspective, that is a positive. Basically, because of stock option compensation and other reasons, ebay has never paid corporate income tax. Now ebay will have to start shelling out tax money. This will not effect eps, as taxes are being provided for, via accruals. It will certainly have an effect on cash available. Nevertheless, a healthy problem to have. Yet, this might crimp what appears to already be a generous valuation.
| Fiscal Year | Federal NOL (begins to expire) | State NOL (begins to expire) |
| 2005 | $70.1M (2019) | $ 67.5M (2006) |
| 2004 | $605.8M (2019) | $138.6M (2006) |
| 2003 | $502.6M (2019) | $238.8M (2006) |
| 2002 | $559.4M (2019) | $133.1M (2006) |
| 2001 | $345.1M (2019) | $149.8M (2004) |
| 2000 | $274.9M (2019) | $128.0M (2004) |
| 1999 | $192.9M (2019) | $ 99.1M (2004) |
6.
| Return on Equity = Net Income X Sales X Assets |
| Sales Assets Equity |
| 2005 | 10.77% |
| 2004 | 11.57% |
| 2003 | 9.02% |
| 2002 | 7.03% |
| 2001 | 6.03% |
7. Quick back of envelope valuation scenarios. These have not been tested and could certainly be error filled.
| EV Analysis | |
| February 24, 2006 | |
| Share Outstanding | 1,407.00 |
| Share Price | $41.00 |
| Market Capitalization | $57,687.00 |
| Less: Cash and Short Term Investments | ($2,089.00) |
| Add: Long Term Debt | $0.00 |
| Minority Interest | $0.00 |
| Enterprise Value | $55,598.00 |
| EV per share | $39.52 |
| Stockholders' Equity | $6,728.00 |
| Adjustments: | |
| Goodwill | ($2,710.00) |
| Tradenames | $0.00 |
| Other Intangibles | ($363.00) |
| Net Stockholders' Equity | $3,655.00 |
| Book Value per Share | $4.78 |
I used 33% for the Net Margin , less the $0.16 - $0.17 per share that ebay mentioned in 10K would be the SFAS 123R effect of stock option compensation.
| Quick Projections 2006 | February 24, 2006 |
| Revenue | $5,900.00 |
| Net Margin % before tax | 28.00% |
| Net Margin before taxes | $1,652.00 |
| Tax Rate | 30.00% |
| Corporate Taxes | $495.60 | <