By: Corey Daigle, Megan Foreman, and Seth Fraser

1. By: Corey Daigle, Megan Foreman, and Seth Fraser

2. Overview Who we are, What we sell, and Where we are Mission and Vision Internal Assessment - Financial Condition - IFE Matrix External Assessment - EFE Matrix - CPM Matrix Strategy Formulation - SWOT Matrix - Space Matrix - IE Matrix - Grand Strategy Matrix - QSPM Matrix - Matrix Analysis Strategic Planning for the Future EPS/EBIT Decisions/Implementation/Evaluation 2004 Financials eBay press releases

3. eBay Inc.2145 Hamilton AvenueSan Jose, California 95125 Headquarters: Stock Symbol: EBAY (NASDAQ) * All graphics and information were found on the eBay website www.ebay.com

4. Who we Are Founded in September 1995, eBay is The World's Online Marketplace® for the sale of goods and services by a diverse community of individuals and small businesses. Today, the eBay community includes more than a hundred million registered members from around the world. People spend more time on eBay than any other online site, making it the most popular shopping destination on the Internet.

5. What we Sell On an average day, there are millions of items listed on eBay. People come to eBay to buy and sell items in thousands of categories from collectibles like trading cards, antiques, dolls, and house wares to practical items like used cars, clothing, books and CDs, and electronics. Buyers have the option to purchase items in an auction-style format or items can be purchased at a fixed price through a feature called Buy It Now.

6. Where we Are People from all over the world buy and sell on eBay. Currently, eBay has local sites that serve Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Malaysia, the Netherlands, New Zealand, the Philippines, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States. In addition, eBay has a presence in Latin America through its investment MercadoLibre.com.

7. eBay’s Community Values eBay is a community that encourages open and honest communication among all its members. Our community is guided by five fundamental values:  • We believe people are basically good. • We believe everyone has something to contribute. • We believe that an honest, open environment can bring out the best in people. • We recognize and respect everyone as a unique individual. • We encourage you to treat others the way you want to be treated.

8. Existing Mission Statement eBay's mission is to provide a global trading platform where practically anyone can trade practically anything. 1

9. Proposed Mission Statement eBay’s mission is to be the world’s most utilized and profitable “trading post.” Having bright and talented employees that are dedicated to serving both customers and communities, eBay provides the most technologically advanced, reliable, and secure trading platform available to anyone, anywhere, while always doing business in a highly ethical manner. 1

10. Proposed Vision Statement Our vision at eBay is provide an online business to enable anyone to auction practically anything. 1

11. External Audit

12. Opportunities 1. Current Internet usage estimated to be 420 million worldwide including 180 million in the US. 2. Generation X and Y entering the workforce. 3. Foreign markets especially in Asia are improving. 4. US and Mexico exceeded $3 trillion in online sales in 2003. 5. E-commerce in Latin America expected to grow to $82 billion in 2004. 6. Under 25 percent of online North American households made an auction purchase in 2003. 7. Online auction sales are estimated to reach $54 billion in 2007. 8. The price of personal computers continues to fall. 9. Internet sales remain tax free. 10. Some customers prefer to finance large purchases "in house" 2

13. Threats Online businesses could possibly be subject to future taxation. 1. 2. Medium fixed cost structure - barrier to entry not significantly high. 3. Ongoining fraud issues, with merchants not sending payment or products. 4. Many people feel the Internet is an unsafe medium to conduct financial business. 5. Many households still do not own a PC. 6. Despite improvements, many foreign economies are still unstable. 7. High unemployment rates in the US. 8. Transportation systems in foreign countries could be poor for delivering products. 9. Fluctuations in currency and exchange rates, could limit international business. 10. Possible website security problems such as hacking. 2

14. EFE Matrix 3

16. CPM 4

17. Internal Audit

18. Key Financials • End of year 2003 • Net Income grew to $442 million, up 77% • Resulted in record operating cash flows of $874 million, up 82% • Year end Balance Sheet • $5.8 billion in total assets • $2.7 billion in cash and investments

19. Key Financial Ratios Company Industry Sector S&P 500 Valuation Ratios P/E Ratio (TTM) 97.12 41.01 28.90 24.01 Beta 1.77 1.30 0.96 1.00 Growth Rates % Sales - 5 Yr Growth Rate 90.58 35.47 17.25 9.30 EPS (MRQ) vs Qtr 1 Yr Ago 55.07 27.30 15.43 28.69 EPS (TTM) vs TTM 1 Yr Ago 60.76 27.58 16.37 21.92 EPS - 5 Yr Growth Rate 111.74 43.79 15.23 12.15 Financial Strength Quick Ratio (MRQ) 3.13 1.22 0.93 1.26 Total Debt to Equity (MRQ) 0.03 0.73 0.82 0.85 5

20. Key Financial Ratios Company Industry Sector S&P 500 Profitability Ratios % Gross Margin (TTM) 80.78 42.23 42.84 47.32 Gross Margin - 5 Yr Avg 79.48 41.08 42.06 47.01 Operating Margin (TTM) 29.01 11.97 12.90 20.33 Operating Margin - 5 Yr Avg 16.21 6.75 11.21 18.35 Net Profit Margin (TTM) 21.00 7.76 7.54 13.12 Net Profit Margin - 5 Yr Avg 13.53 3.74 7.62 11.59 Management Effectiveness % Return on Assets (TTM) 9.10 8.29 5.91 6.40 Return on Investment (TTM) 10.18 11.53 7.98 9.97 Return on Equity (TTM) 10.50 14.04 13.51 18.71 www.investor.stockpoint.com March 2004

21. eBay Stock Information

22. eBay Stock Information

23. Strengths eBay is the most well known online auction company in the world. 1. 2. Strong auction community of loyal customers. 3. Excellent financial situation. 4. Have a fair payment system that encourages merchants to list products. 5. Strong presence in strategic global markets. 6. Experienced management team. 7. eBay has very little inventory since they do not actually take position of items sold on their site. 8. Strong customer service. Percent of revenue in international markets increasing significantly. 9. Easy URL to remember. 10.

24. Weaknesses 1. Weak promotional and marketing activities. 2. eBay does not pay dividends on their stock. 3. Some customers feel the website is cluttered. 4. eBay’s position in the business to business (B2B) market is weak. 5. eBay has very little debt, therefore the company is not taking advantage of low interest rates to expand. 6. eBay has a higher tax rate since they do not take advantage of depreciation as well as other companies. 7. The company relies too much on word of mouth advertising, assuming everyone already knows about eBay. 8. The company does not do enough to convince leery potential customers that Internet business is financially safe. Longer transaction times, since many merchants will not receive payment until a buyers check clears. 9. 10. eBay is mainly a cash business.

25. The Matrices

26. SWOTMatrix 7

27. Financial Strength (FS) Environmental Stability (ES) Return on Investment (ROI) 6 Rate of Inflation -1 Leverage 2 Technological Changes -4 Liquidity 6 Price Elasticity of Demand -3 Working Capital 5 Competitive Pressure -5 Cash Flow 6 Barriers to Entry into Market -6 Financial Strength (FS)Average 5 Environmental Stability (ES) Average -4 9

28. Competitive Advantage (CA) Industry Strength (IS) Market Share -1 Growth Potential 5 Product Quality -2 Financial Stability 4 Customer Loyalty -2 Rivalry Among Competitors 4 Technological know-how -3 Resource Utilization 4 Control over Suppliers and Distributors -5 Profit Potential 6 Competitive Advantage (CA) Average -2.6 Industry Strength (IS) Average 5

29. SPACE Matrix

30. The Total IFE Weighted Scores Strong Average Weak 4.0 to 3.0 2.99 to 2.0 1.99 to 1.0 4.0 I II III High 3.0 IV V VI The 24% 24% EFE Total eBay Medium Weighted Scores 76% 76% Domestic International 2.0 VII VIII IX Low 1.0 IE Matrix 11

31. Rapid Market Growth Quadrant II Quadrant I Weak Strong Competitive Competitive Position Position Quadrant III Quadrant IV Slow Market Growth Grand Strategy Matrix 10

32. QSPM Expand Expand further into operations to international B2B markets markets Opportunities Weight AS TAS AS TAS 1. Current Internet usage estimated to be 420 million worldwide 0.07 4 0.28 2 0.14 including 180 million in the US. 2. Generation X and Y entering the workforce. 0.02 0 0.00 0 0.00 3. Foreign markets especially in Asia are improving. 0.03 4 0.12 3 0.09 4. US and Mexico exceeded $3 trillion in online sales in 2003. 0.04 4 0.16 3 0.12 5. E-commerce in Latin America expected to grow to $82 billion in 0.03 4 0.12 3 0.09 2004. 6. Under 25 percent of online North American households made an 0.07 0 0.00 0 0.00 auction purchase in 2003. 7. Online auction sales are estimated to reach $54 billion in 2007. 0.08 3 0.24 4 0.32 8. The price of personal computers continues to fall. 0.04 4 0.16 2 0.08 9. Internet sales remain tax free. 0.04 2 0.08 4 0.16 10. Some customers prefer to finance large purchases "in house" 0.03 0 0.00 0 0.00 Threats Weight AS TAS AS TAS 1. Online businesses could possibly be subject to future taxation. 0.04 1 0.04 2 0.08 2. Medium fixed cost structure - barrier to entry not significantly high. 0.10 1 0.10 2 0.20 3. Ongoing fraud issues, with merchants not sending payment or 0.08 1 0.08 2 0.16 products. 4. Many people feel the Internet is an unsafe medium to conduct 0.07 1 0.07 2 0.14 financial business. 5. Many households still do not own a PC. 0.07 1 0.07 4 0.28 6. Despite improvements, many foreign economies are still unstable. 0.03 1 0.03 3 0.09 7. High unemployment rates in the US. 0.05 0 0.00 0 0.00 8. Transportation systems in foreign countries could be poor for 0.02 1 0.02 3 0.06 delivering products. 9. Fluctuations in currency and exchange rates, could limit international 0.02 1 0.02 4 0.08 business. 10. Possible website security problems such as hacking. 0.07 2 0.14 1 0.07 QSPM

33. Expand Expand further into operations to international B2B markets markets Strengths Weight AS TAS AS TAS 1. eBay is the most well known online auction company in the world. 0.08 4 0.32 3 0.24 2. Strong auction community of loyal customers. 0.06 4 0.24 3 0.18 3. Excellent financial situation. 0.15 4 0.60 3 0.45 4. Have a fair payment system that encourages merchants to list 0.05 3 0.15 4 0.20 products. 5. Strong presence in strategic global markets. 0.05 4 0.20 3 0.15 6. Experienced management team. 0.03 3 0.09 4 0.12 7. eBay has very little inventory since they do not actually take position 0.02 3 0.06 4 0.08 of items sold on their site. 8. Strong customer service. 0.02 3 0.06 4 0.08 9. Percent of revenue in international markets increasing significantly. 0.05 4 0.20 3 0.15 10. .Easy URL to remember. 0.01 4 0.04 3 0.03 Weaknesses Weight AS TAS AS TAS 1. Weak promotional and marketing activities. 0.05 1 0.05 2 0.10 2. eBay does not pay dividends on their stock. 0.01 0 0.00 0 0.00 3. Some customers feel the website is cluttered. 0.02 1 0.02 2 0.04 4. eBay's position in the business to business (B2B) market is weak. 0.08 0 0.00 0 0.00 5. eBay has very little debt, therefore the company is not taking 0.07 1 0.07 2 0.14 advantage of low interest rates to expand. 6. eBay has a higher tax rate since they do not take advantage of 0.07 0 0.00 0 0.00 deprecation as well as other companies. 7. The company relies too much on word of mouth advertising, 0.03 1 0.03 2 0.06 assuming everyone already knows about eBay. 8. The company does not do enough to convince leery potential 0.04 1 0.04 2 0.08 customers that Internet business is financially safe. 9. Longer transaction times, since many merchants will not receive 0.03 1 0.03 3 0.09 payment until a buyers check clears. 10. eBay is mainly a cash business. 0.08 2 0.16 1 0.08 TOTALS 4.09 4.43

34. New Strategies Expand to all countries of the world Cost: $500,000.00-1,000,000.00(advertising) Advance in security of personal information 1,000,000.00+ Increase in Industry N/A Increase revenues by capturing more customers N/A Look into new pay system or create own (PayPal only in 38 countries) Millions Suggestion/Recommendations

35. We believe that our continued profitability at historical levels will depend in large part on our ability to do the following: • attract new users and keep existing users active on our websites;    • manage the costs of our business, including the costs associated with maintaining and developing our websites, customer support, transaction and chargeback rates, and international and product expansion;    • maintain sufficient transaction volume to attract buyers and sellers;    • increase the awareness of our brands; and    • provide our customers with superior community, customer support, and trading experiences. * excerpt from eBay Annual Report 2003

36. EPS/EBIT Analysis • $Amount Needed: $1,500 • Stock Price $45 • Tax Rate 80/162=40% • Interest Rate 5% • #Shares Outstanding 609 14

38. Decisions Primary: Expand aggressively into China Secondary: Increase business to business operations Increase marketing campaigns in Asia

39. Implementation Objectives: Create a fully translated Chinese eBay site Increase sales by 35% Increase number of registered users

40. Evaluation Quarterly & Yearly Financial Statements Annual strategic meetings of division management and corporate management

41. 2004 Financial Information More than 104.8 million registered users 327.7 million items More than $8 billion in gross merchandise sales * All from first quarter of 2004

42. eBay in the News March 8, 2005eBay Launches Classifieds Web Sites February 23, 2005eBay Completes Acquisition of Rent.com December 1, 2004eBay Launches Service for Malaysia