Tuesday, April 28, 2009

EBAY and PayPal

I agree with Jim Cramer's comment earlier about EBAY. A big financial institution should buy this company, in order to get the PayPal crown jewel.

EBAY's been such a mish-mash for so long with all these various web companies flung together. They could and should be sold off. The Skype business unit could be quickly sold back to the original founders by a financial company that didn't care about getting back the $1.7B in value which is sitting on EBAY's books. MSFT, GOOG, and YHOO would be interested in the web assets. Ticketmaster (TKTM) should look at Stubhub.

I went back to the EBAY March analysts' day replay this morning and it's really compelling when you start to look at PayPal. Donahoe said it's the most misunderstood part of EBAY and he's right (and he's responsible for that). PayPal does have the chance to be the only dominant payment player in the online merchant space going forward. No credit risk, multiple relationships with financial institutions and merchants. It would be a compelling asset for any large player like a V, MA, or AXP.

Originally published in RealMoney.com on 4/23/2009 2:22 PM EDT

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