Notes from the 2006 Q4 eBay Conference Call

Phil and I listened in on the eBay conference call this afternoon; obviously announcing a successful quarter and year for eBay as a company and by several measures for Skype.. Some of the highlights, especially with respect to Skype:

  • If we heard it once, we heard it multiple times: the number one challenge for Skype is monetization and the associated drive to develop new sources of revenue. The one Q4-06 “downer” was the lower than expected monetization of Skype. For the full year Skype brought in $192MM revenue (against what has been thought to be a target of $200MM).
  • eBay CEO Meg Whitman expressed as the major achievement for Skype during the quarter the market share lead they had built up within the VoIP competitive space and how the gap between Skype and the others was growing.
  • Notice within those numbers how the quarter-to-quarter SkypeOut usage doubled in Q4 to 400 million minutes from the 200 million minute growth of the previous three quarters. Was some of this the full impact of free SkypeOut in North America resulting from increased North American subscriptions?
  • They feel that SkypeMe buttons are showing success both through increased conversion rates by eBay sellers who use SkypeMe and increased SkypeMe availability for over 150 categories in 20 markets. Basically they are letting eBay sellers determine if and when they introduce SkypeMe and letting the viral feedback from successful outcomes drive adoption.
  • One of eBay’s overall priorities for 2007 is to improve the user experience. To this end they transferred an executive from Germany to manage the auction business. One of his goals is to increase the fun and excitement of the auction business; including “experimenting with Skype”. (In my second post tomorrow on an eBay-Skype viral opportunity I’ll be including one recommendation.)
  • Over 25% of Skype’s payments are now coming through PayPal. As an aside, in response to a question about Google CheckOut’s impact, Meg mentioned how the publicity for Goolge CheckOut had actually given a bump to market leader PayPal in both users and transactions. She also mentioned how PayPal has many more ways to make payments than Google CheckOut which she described as a wrapper for Visa and MasterCard.
  • In response to one question on Skype’s incorporation into Google Pack, Meg described how Google had taken an agnostic view of the best features of the web in coming up with an introductory package of products and services for “newbies’ to get acquainted with what one can do on the web.

Overall 2007 goals for eBay included:

  • improving the user experience through a better integrated experience, simplified sites for buyers and improved ease-of-use and voice quality for Skype
  • extending their leadership position in all businesses
  • continue to innovate
  • apply financial discipline

Two indications of eBay’s financial health and confidence in the business were (i) increased guidance to investors for 2007 and (ii) expanding their share buyback program to double its initial goal of $2 billion.

Now if they would just eat their own dog food and do their next quarterly conference call using Skypecast or one of their partner’s conferencing services!

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About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.

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