eBay after the bell 6/15/06: Demand issues and potential Skype growth problems

eBay sellers want more buyers demand while growth of Skype users may not meet targets.

eBay Sellers have been pressuring the company to increase buyers' demand.  In response, eBay will soon heavily promote its eBay Express instant-purchasing, partly also to curb shady practices on the sellers' part.  eBay Express enables buyers to complete their transaction on the spot rather than wait for auctions to run their course and the bids to be filled, or not.  In addition, the company will pay independent Web sites that feature eBay listings a percentage of sales.

At the same time, Skype, eBay's wholly-owned subsidiary (acquired for $2.6 billion) is trying to increase customer growth in North America.  In fact, it is trying so hard it is now offering free calls from PC to landline or wireless phones within the U.S. and Canada, instead of the two-cents-a-minute fee it used to charge.  Skype is hoping this step will help curtail its fierce competition.

Could this move be an indication that Skype is behind growth targets and goals agreed upon with eBay?  Some analysts believe it is and that it is possible Skype might even have to further extend its offer of free PC-to-phone calls in order to increase their customer base sufficiently.  While Skype managers deny any growth problems or any more price cuts, they also stand to gain a hefty bonus if the goals are met.

eBay started the trading day on a down note, but ended nearly flat with a gain of 0.25% to close at $30.7355.