eBay Earnings Call Nuggets: Growth Strategies and the Future of Marketplaces
Ross Sandler – Deutsche Bank: Just two quick questions. First, can you talk about your growth strategy in Latin America? Is there a scenario where you would try to get back into some of those markets with your Marketplaces business or is it likely to remain PayPal only? And then, the net charge-off at BML was up a little bit more than prior quarters. Can you just give us more color on what’s driving that?
John Donahoe – President and CEO: Ross, on Latin America, yes. Latin America is an important growth opportunity for us. As you mentioned, PayPal always had a strong cross-border business. We now have domestic payment capability in Brazil for PayPal. The Brazilian growth is on fire with domestic payments capability in Mexico. So, PayPal is aggressively penetrating Latin America in both cross-border and domestic market. And then with eBay, eBay has a strong cross-border business in and out of Latin America today, and we’re doing things to accentuate that.
So, for instance, we launched a mobile app in Brazil for a quarter that allowed Brazilian consumers to shop eBay’s global inventory in a more convenient way. We also have classified investments in Latin America. So, it’s an important market and one that we’ll continue to focus on and one I think you’ll see us continue to take action in.
Bob Swan – SVP, Finance and CFO: Ross, on your second question relating to charge-offs…
I think Bill Me Later charge-off is up a little bit; RAM or risk-adjusted margin down a little bit, in line with our expectations, and in effect, as you know, with this business what we’ve been able to demonstrate is by using Bill Me Later we drive higher convergence at our clients’ sites. So, we feel great about kind of the growth prospects. Over the long-term horizon, we think the right kind of risk-adjusted margin for this business is in the 14% to 16% range.
Effectively we want to be able to take risk to help grow this business and adopt Bill Me Later more and more in the PayPal wallet because of the additional economic benefits we get by lower funding costs in the wallet. So we adjust our risk parameters to drive a growing loan portfolio helping our clients convert more and have risk-adjusted margins in the 14% to 16% range that improves the overall ecosystem in the business. So that’s how we think about it. The quarter was basically in line with our expectations in how we drive the business.
The Future of Marketplaces
Sanjay Sakhrani – KBW: I will ask my two questions upfront. I was hoping to get a sense of the trajectory of Marketplaces in 2013 relative to the steps you took in 2012. Is the goal to grow market share and kind of improve in other verticals just like you did in clothing and accessories and home and garden? I’m just trying to reconcile kind of the step down in revenue growth in your expectations. Second, if you could just talk about uses of capital?
John Donahoe – President and CEO: In the Marketplaces we feel just terrific about how the Marketplaces ended the year and also about the whole year 2012. As you highlighted those results have really been driven by a number of factors, the factors we have been working on are less over the years but they all coming together right now; improved trust, a better user experience. Mobile is no doubt driving growth in this business and the vertical experiences as you described our consumers are finding our vertical experiences very attractive and new user growth continues to accelerate.
So we expect to continue that momentum into 2013, and Devin and his team are very focused on going after new sets of opportunities including the BRIC and emerging markets, including adding large retailer inventory onto eBay, including making it easier for consumer sellers to list on eBay and provide a great buyer experience. So those are the things and we feel very good about the business and we think the strong momentum will continue and absolutely our aspiration goal is to grow faster than the market.
Bob Swan – SVP, Finance and CFO: I would — just another point of context for the fine point on John’s comment. 24 months ago, we said the business would be $7 billion to $8 billion in size, 12 months ago, we said it would be around $7.5 billion to $8 billion and today we are saying it’s going to be north of $8 billion, indicative of the progress and the momentum we have.
So we feel very good about our position. On your second question, capital — frankly more of the same, we think about investing organically first and foremost, and particularly for us that means leveraging our offshore cash to fund the growth of Bill Me Later. Secondly, we look at strategic acquisitions to accelerate the competitive position of the Company and our individual business units that will continue to be something where we will make acquisitions that we think will make us stronger. Then third is continuing returning capital to shareholders and we do that in effect by offsetting dilution from our comp based program. So continuing that three-pronged approach for how we effectively use our capital organically, acquisitively and returning to shareholders.
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