Pheebay.com have just posted an analysis of Ebay's Q2 results on the Pheeblog:
http://www.pheebay.com/blog/2007/07/paypal-weak-dollar-do-trick-for-ebay.html

The blog reads as follows:

"So the Q2 numbers are revealed and, on the face of it they looked good. Very good in fact.

Meg Whitman gave a very bullish overview but acknowledged they had issues to address in the key markets of the US and Germany.

But for me the real substance came from Chief Financial Officer, Bob Swan.

When you analyse his comments yesterday, there appears to be a little more recognition of the factors helping eBay post record numbers despite falling listings on the flagship eBay.com site aswell as the important European market in Germany.

"Our marketplace business today is a much more diverse portfolio than it used to be, and this helped accelerate growth," In other words, growth wasn't so apparent in the core eBay Auction business.

"eBay's bottom line also benefited from the company's global exposure. A weaker dollar boosted earnings and more attractive tax rates abroad boosted earnings by about 2 cents a share". My simple maths makes me believe the effect of the weak dollar is greater than this statement suggests.

"Our global expansion is paying off with regard to the top and bottom line" I translate this as meaning; "thank God we aren't totally reliant on the US business"

The other aspect of these reports is the vague exclusions they mention before detailing earnings per share etc. While revenue from Skype doubled we aren't told what costs were involved and eBay are still a long way away from recouping the cost of acquisition. Is Skype producing sufficient PROFIT on trading now - and is their technology sufficiently future proof - to make the original purchase price justified?

I didn't see any great mention of eBay Express in these reports. Do you remember eBay Express?

Despite these numbers being heralded as 'record profits' again, Wall Street is apparently underwhelmed today as the stock price heads south again. I'm not surprised. For these sparkling numbers to be accepted as more to do with exchange rates and tax breaks, it doesn't inspire too much longer term confidence.

For me, Paypal is rapidly becoming the real jewell in eBay's 'diverse' portfolio of businesses. If they manage to keep a lid on Google's ambitions with 'Checkout', Paypal appears to have a great future ahead as - even if eBay's core business diminishes - rival auction houses will still point a lot of payment processing to Paypal.

As an aside, for the life of me I cannot understand how the management has been let off the hook from the claims they made to justify their treatment of eBay Stores in Summer 2006. Nobody seems to ask such obvious questions. The 2006 fee hikes and store invisibility policy was justified on the grounds it would 'restore a balance between core and store listings' and 'bring back the magic to eBay's core listing site'. To my eyes, on both counts, this has proved totally wrong. The positive revenue impact of the fee hikes a year ago has been all but negated by the constant use of Cheap Listing promotions aimed at propping up listing numbers. This in turn does the same damage to listing quality that stores were being attacked for.

Now Meg Whitman announces we can expect some aggressive marketing come September for eBay.com and the German site. So, plenty more cheap listing promotions I assume. Maybe an extension to the current final value fee cuts currently a feature on the dotcom site too? Looks awfully like a realisation they squeezed american sellers too much on fees to me.

The UK site bucked the trend and grew apparently despite very expensive fees. Fortunately for eBay, UK users are used to living in an expensive environment and have all but lost any sense of value for money. For some strange reason Brits appear to enjoy the label 'Rip of Britain'!

With suggestions interest rates may start to rise in the US soon, which should bolster the Dollar, I can see this helping the US site's apparent 'recovery' in the next year. But with the dash to invest in non-dollar marketplaces around the world the overall effect may not be so useful for the multi-faceted giant.

I remain an eBay fan for the longer term. If properly directed the core business could be flourishing still in my view. But I do not buy in to the convaluted mess of brands that has been created. I see a cumbersome business that appears to be driven more by exchange rate markets and various tax policies than it is by internal management.

I want to see fresh, younger visionaries at the helm and soon."