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eBay Inc. Message Board

  • gewizmeto gewizmeto Jan 25, 2014 3:38 PM Flag

    •Carl Icahn Is Missing a Bigger Problem at eBay Motley Fool (Sat 1:36PM EST) Must Read!

    What really matters is how shareholders haven't seen the rewards of eBay's success. In the full year 2013, eBay generated free cash flow of roughly $3.75 billion. This is actual cash -- dollars and cents -- that could be paid out to shareholders. In a world where most dot-coms are mere start-ups losing cash, eBay is a money-making machine.

    Unfortunately, eBay shareholders aren't the first priority. The company doesn't pay a dividend, but it did spend $1.34 billion to repurchase stock in 2013. Ordinarily, this would be great for shareholders. Share count should go down, earnings per share go up, and each share is worth more of the company than it was before. Fair enough.

    Except, this didn't happen. Instead, eBay has merely covered up the cost of its aggressive stock and option programs. eBay started 2013 with 1.319 billion diluted in shares outstanding, and ended with an estimated 1.307 billion shares outstanding. eBay essentially paid $111.83 per share in share count reduction, all the while its shares were available at or around $50. The bulk of share repurchases just covered up compensation.

    Perfect data won't be out until the annual report hits the SEC website, but if we were to make a rough graph of the efficiency of eBay's repurchases this year, the estimations would reveal a chart that looks like this:

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