Australian eBayers are up in arms over a new policy by the company to accept only PayPal as payment for online auctions. The fact that eBay owns PayPal is causing critics to charge a conflict of interest, and the new rule is being widely protested by professional eBay sellers in Australia.
eBay seems to be experimenting with the PayPal-only policy, and company representatives have admitted that if all goes well in Australia, eBay may become PayPal-only in larger markets like the European Union and the United States. But Australian eBayers are saying “not so fast!”
The biggest reason for the outrage amongst Australian eBay users is simply…price. The most common method of payment and Australia is by direct bank transfer. Australian banks routinely charge approximately $.20 US per transfer, regardless of the amount of money being paid. Compare that to PayPal’s rates, which can be as high as 4.4% of the total purchase price in Australia. This means that selling a more expensive item incurs a much higher money transfer fee through PayPal than by ordinary bank transfer.
In Europe as well, the direct bank transfer (or bank gyro) is the most common method of payment for goods and services. It’s not surprising then, that Europeans are watching closely to see how eBay’s PayPal-only rule plays out in Australia.
The fact that eBay owns PayPal out right is causing many to see a conflict of interest in the policy, and to suggest that the company is trying to set up a monopoly to increase their bottom line. eBay defends this charge by suggesting that PayPal payments are safer, and help the company reduce the risk of fraud and abuse in the system.
Overall though, it seems that many economists and financial experts (as well as eBay power sellers) are not buying this argument, noting that both credit cards and bank transfers also have significant fraud protection in place. There’s also no denying that eBay stands to profit from the PayPal-only rule, and even the Australian Competition and Consumer Commission is investigating the new policy, and could potentially revoke eBay’s anti-trade immunity if it finds a conflict of interest, or decides that the new policy disrupts normal competition in the marketplace.
This is not the first time in eBay has found itself in hot water over free trade practices, or with its professional sellers. In fact, the company has been progressively alienating many eBayers over the last several years; first by raising their sellers fees, then by charging additional fees for photo hosting, and now by cutting into its seller’s bottom line by insisting on PayPal-only payments for online auctions.
If this trend continues, eBay may find many of its biggest sellers opting out altogether. Because while eBay is certainly the largest online auction site in the United States — and in most countries where it competes — it is by no means the only online auction service. The company would do well to remember that it is their power sellers that actually bring in the income, and they have made eBay the profitable corporation is today.
If you’ve watched the network and cable news at all over the past few months, you might be forgiven for thinking that “the sky is falling” when it comes to the US economy. News anchors, journalists and pundits have been talking “recession” nearly nonstop recently, but surprisingly, many indicators suggest that the US economy is more resilient than we’ve been led to believe by the 24 hour news networks.
Consider the recent indicators from the US service sector, which show that the sector expanded in April from 49.6% to 52%, beating the predictions of both pundits and economists. Overall, the US service sector represents about 70% of the American economy, so it is obviously a very good indicator of the overall state of the US economy.
In addition, employment and manufacturing indexes for the first quarter of 2008 also showed better than expected numbers — further evidence that the US economy could rebound quicker than predicted by many economists.
While the US economy may (or may not) be in a recession, the new service sector reports and other indicators suggest that things may not be as dire as the news media would have you believe. Even the US dollar, which has been at all-time lows against many currencies over the past six months, has shown slight gains in the past few weeks.
Also, on Friday the US jobs report was released for the first sector of 2008. The report showed that US hiring was surprisingly strong, considering the relative economic slowdown over the past two quarters. In fact, the recent employment report posted the highest numbers since December of 2007, and suggests that business services employment is also more robust than most pundits had predicted.
The jobs report lends significant credibility to the US service sector report, indicating that even though the US economy is in a bit of a slump at the moment, things are definitely not spiraling out of control, as has been reported by some cable news networks.
On the downside, the business activity index fell 1.3 points in the first quarter of 2008, suggesting that new businesses, especially, are still in a slump. Overall, the economic indicators are somewhat mixed, but there are enough positive trends to suggest that the economy could rebound by the fourth quarter of 2008, or possibly even sooner.
The great moral of all this is this: the US economy may be in a slump for the time being — but it is certainly not in a recessionary tailspin.
Shares of Circuit City stocks rose dramatically this morning after it was announced that Blockbuster Inc. has offered to buy out the electronics retailer at about seven dollars per share. Curiously, Blockbuster shares have been down for the last several quarters, leaving many Wall Street analysts scratching their heads, wondering why the company would choose to go after Circuit City at this time.
Shares of Circuit City stocks were up by $1.40 per share this morning, while Blockbuster shares plummeted approximately 11%. It would seem that the word on Wall Street is that the takeover — if it happens at all — would be better for Circuit City that it would for Blockbuster.
The Dallas Business Journal is reporting that Blockbuster has offered $1 billion to buy out Circuit City. However Circuit City executives have voiced doubts about Blockbuster’s ability to raise one billion in capital or financing. The company is offering approximately seven dollars per share for a stock now trading at $3.90 per share (as of the 11th of April, 2008).
So far, Blockbuster has not revealed how they plan to raise the $1 billion offered to buy out Circuit City. Blockbuster CEO Jim Keyes said that the buyout proposal “offers Circuit City a significant premium to its existing stock price and create a game changing retail concept with a sustainable competitive advantage.”
Circuit City has been struggling over the last few quarters, reporting significant losses, and making the company an attractive prospect for “unsolicited” takeovers. If the Blockbuster deal were to be accepted, the combined company would have a street value of approximately $18 billion, and provide Blockbuster with nearly 700 electronics retail outlets in the US, and 779 and Canada.
Blockbuster, on the other hand, boasts 7,800 stores globally, with the majority of those being located in the North American market. The combination of Blockbuster’s retail video rental outlets with Circuit City’s electronics superstores would create a huge media and electronics company with nearly 10,000 retail outlets.
But it wasn’t so long ago that Blockbuster was struggling itself. The success of Netflix online video rental service caused Blockbuster to lose significant market share over the past four years. Most of those losses had been regained though, as Blockbuster introduced its own online film rental service to directly compete with Netflix, and bolster the sales of its existing retail outlets.
Buying out Circuit City for $1 billion would likely require a major restructuring of Blockbuster’s debt, and the deal would also need to be approved by the Securities and Exchange Commission. Circuit City is reportedly reviewing the offer carefully, but many analysts believe the company may have no choice other than to accept the buyout agreement.
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As a company, Yahoo has always been just a little bit different. Yahoo’s Silicon Valley “campus” is arguably the most collegiate corporate headquarters of any major company in the United States, with a distinct and often irreverent culture that is the antithesis of many modern corporations — including that of Microsoft Inc.
With the announcement last week that Microsoft is attempting to “buy out” Yahoo Inc. in its entirety with a $44.6 billion “unsolicited bid,” many Yahoo employees fear that a successful merger with Microsoft would rob Yahoo of its quirky and unashamedly humorous culture.
Within the IT industry, Microsoft has a reputation as the “big gray giant” on the playing field. A reputation only made worse by Microsoft’s monopoly-like status, and the dozens of anti-trust lawsuits filed against the corporation every year.
To the contrary, Yahoo has a reputation as a fun-loving workplace. A major part of Yahoo’s success has come from its sense of humor–not taking themselves too seriously. Even the company’s television commercials reflect this irreverence; the famous Yahoo yodel being one glaring example of the company’s quirkiness.
And though Yahoo’s stock has floundered over the past several years, the company’s spirits have remained high. That is, until the prospect of being swallowed up by Microsoft came into view. ZDNet.com is reporting that morale is now quite low at Yahoo’s Silicon Valley headquarters.
While employees are somewhat validated and encouraged by Microsoft’s huge multibillion-dollar offer for their company, at the same time, many feel that it is the end of an era, and that Yahoo’s quirky “Dharma Initiative” style progressive workplace will soon be a thing of the past.
Many feel there will be an inevitable culture clash should Yahoo become just another “tentacle” of the massive Microsoft Corp. Yahoo’s fun, irreverent and innovative culture could be the first casualty of a merger with Microsoft, and could potentially move the company far away from its quirky entrepreneurial roots, and toward a more traditional “gray suit and cubicle ” American company — in other words, boring.
But if Microsoft does take over Yahoo (and it appears they probably will), their best strategy would be to preserve as much of the company’s offbeat culture as possible. After all, Yahoo’s unorthodox workplace has attracted amazing talent to the company, and has led to many outstanding web innovations.
For now, Yahoo employees will simply have to wait and see if the special culture they have created over the years is strong enough to survive a takeover by “The Big Gray.”
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What in the world is going on with the real estate market in the United States? It appears that the American housing market slump hasn’t quite reached its bottom yet, and may continue to slide through spring 2008.
A recent article from Bloomberg.com reports that home foreclosures doubled in September to a record 223,538 filings. California and Florida were the states hit hardest by the recent upturn in foreclosures. Nationally the foreclosure rate is now one out of every 557 homes according to the California-based real estate monitoring firm, Realtytrak.
Some analysts are now concerned that the US real estate drop could begin to affect unemployment rates and other economy benchmarks. Currently there is an estimated 10 month’s worth of unsold properties in the United States — amounting to the highest level of unsold homes in more than eight years.
Homeowners hit the hardest are those with adjustable rate mortgages, or “ARMs,” many of whom are going into default on their mortgages as soon as the higher interest adjustments kick in. Amongst adjustable rate mortgage owners, the foreclosure rate is much higher than the national average, even approaching record foreclosure rates in many of the hardest hit areas.
But for those in the market for a new home, the news could not be better. Average home prices in some US major markets fell 3.9 percent over the past 12 months, the steepest slide on record, according to the Case- Shiller Home Price Index. Savvy buyers have been taking advantage of the high rate of foreclosures over the summer and into the fall. Nevada has been hit particularly hard, resulting in bargain deals for so-called “house flippers.”
And in California, where the foreclosure rate is as high as one out of every 248 homes, average property prices are dropping monthly. California and Florida, in particular, have seen the greatest losses in average property values over the past 18 months. This of course is bad news for home owners trying to build up equity in their properties, but great news for potential investors, who now see bargains beginning to appear in most major metropolitan areas.
Surprisingly, some analysts are predicting that home prices could go even lower in the first quarter of 2008, but most experts agree the housing slump will begin to turn around by the fourth quarter of 2008, or the first quarter of 2009.
Homeowners who are able to ride out the slump will likely begin to see some relief in 2008. But for first-time homeowners, the market is plentiful, interest rates are reasonable, and prices are continuing to drop in many major markets, producing an ideal situation if you’re looking to get into your first home.
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