Should eBay's Meg Whitman resign?
Posted
Jan 03 2008, 06:21 AM
by
Kim Peterson
Rating:
There's been some talk lately about whether eBay CEO Meg Whitman should resign. EBay would be invigorated if she did. Recently, she's been criticized for signing on as the financial co-chair of Mitt Romney's presidential campaign. Whitman met Romney years ago when she consulted for his private equity firm.
At BloggingStocks, Gary Sattler thinks that Whitman might request a paid leave of absence from eBay to work on the Romney campaign. I really doubt that. It's ludicrous to think that a CEO of a major public company would do such a thing. If Whitman indeed asks for time off to campaign, eBay shareholders have every right to be angry.
Putting politics aside, is it time for Whitman to step down? If you're an eBay shareholder, you might think so. The stock was abysmal in 2006 and continued to disappointment in 2007, staying mostly in the $30-$35 range when companies like Amazon saw shares go through the roof. (Ebay closed yesterday at $32.49.)
Ebay has seen huge growth and international expansion during Whitman's 10-year tenure as CEO. The company is in nearly 40 markets, and has about 250 million registered users. Ebay says it has 100 million listings on its site at any given time, with 6 million added each day.
The company is undoubtedly an auction powerhouse. The problem is that it has remained just that, despite numerous attempts to expand to new areas. Perhaps the biggest black mark on Whitman's time at eBay is the $2.6 billion acquisition of Internet calling company Skype in 2005. What an expensive mistake. Skype never meshed with eBay and should be spun off as soon as possible.
Ebay is trying other things, like introducing its own "Neighborhoods" social networking service, but so far that doesn't seem to have taken off either. (Check out eBay's sad, sad iPod neighborhood).
Let's return to Amazon for a minute. The two companies are being compared more often lately, fairly or not. Amazon has surged where eBay has failed, and it's become the go-to site for product research and exploration. You can sell used items on Amazon as well. There is growing dissatisfaction from eBay sellers who don't like the site's increasing fees and restrictive policies. What's to stop a mass exodus to Amazon?
Finally, let's look at some quick revenue and profit numbers at eBay. For the first three quarters of 2007, eBay has pulled in some serious sales. Its cumulative revenue over that time is about $5.5 billion. That's up from $4.2 billion for the same period in 2006. Quarterly profit is approaching $400 million, up from $250 million in each of the first two quarters of 2006.
My take: EBay has some serious problems, including
an increasingly angry user base. The company has made mistakes and needs to clean up its own house before expanding further. Whitman has done a good job shoring up sales and steering the company's expansion. She doesn't have to resign, and eBay would probably plod along just fine. But if eBay ever wanted to grow up, to move beyond auctions into a meaningful and powerful consumer experience, it must drop Whitman for a more suitable visionary.
