We got strong news from Google last week (though you wouldn't necessarily know it from investor reaction to its earnings report), and we got good news from Yahoo last night (though you wouldn't necessarily know that either, based on investor reaction.)
Tonight, it's eBay's turn.
This is a company firmly in turnaround mode. Its holiday quarter showed nice momentum. The company's transformation over the past year under CEO John Donahoe's leadership has been noticeable.
Tonight's report will be a referendum about where on the timeline his turnaround strategy is, with many indications that it's going just fine, thank you very much. Like Yahoo , the worst might very well now be in eBay's rear view mirror, and that's good. But like Yahoo, eBay's growth and return for investors may not be as robust as other players in its sector specifically, and other players in tech more generally, and that's not so good.
The Street anticipates 41 cents a share in earnings on $2.18 billion. For the company's second quarter, the Street is looking for 40 cents a share on $2.2 billion.
Mark Mahaney at Citi once again offers his "cheat sheet" for this report and it will prove useful tonight. Mahaney expects a 7 percent increase in Gross Merchandise Value, excluding cars, to $5.16 billion. He says anything less than growth of 6 percent could be perceived negatively. Internationally, the number should jump 35 percent to $8.69 billion, and growth below 29 percent could be a problem.
Marketplaces transactions should grow 15 percent to $1.19 billion, with 16 to 18 percent growth essentially neutral; over 18 percent would be good. PayPal transactions should see another stellar quarter of growth, thanks to eBay's heavy emphasis on this profit center, with Mahaney expecting 25 percent year over year growth to $754 million. Active user growth should be up 2 or 3 percent, he says.
It's not all rosy for eBay. The company is still suffering margin declines in both its Marketplaces and Payments areas, says Mahaney, so some improvement here, or even guidance to that effect could be taken as a positive. (Mahaney has a "hold" on these shares with a target of $28.
I've spent some time with CEO Donahoe over the past few quarters and thus far I've liked what I've heard, and liked what I've seen. He has undertaken a wholesale redesign of the company's strategic direction and it seems to be paying off.
It's been a while since we've seen eBay's core auction business grow, and we should see that this time around. We got indications that buyers and sellers were coming back to the platform last quarter, so it is critical to see that the momentum is continuing this quarter.
Mobile has also been a huge focus for this company. PayPal's app for Apple's iPhone has been an absolute boon to this company with Donahoe telling me the amount of transactions on that platform using eBay has been mind-blowing. And with iPad already enjoying enormous success -- and eBay's new offering for that device —should accelerate mobile market penetration even further.
Still lurking of course is Amazon, which reports its earnings tomorrow. I have posted before that eBay is to Amazon like Yahoo is to Google . But unlike Yahoo, which before yesterday's earnings was up 10 percent on the year against Google's 10 percent decline, eBay's up about 7 percent year to date while Amazon has jumped better than 50 percent.
EBay trades at 14 times next year's earnings while Amazon trades at 38 times. What's the better buy? It'll come down to potential and valuation. It's a tough call. Purely on valuation and the direction eBay's headed, along with Donahoe's stewardship, it would seem eBay's got more headroom here. Amazon has always been expensive though, and earnings after earnings, it seems this company delivers. eBay should give us at least a little visibility into what Amazon might report tomorrow.
Given the climate, however, eBay needs to do quite a bit tonight to move these shares forward. They're selling off a bit into tonight's news, and that's likely because of the fall-out investors suffered post Google and Yahoo news, even though it was generally pretty good.
If eBay sells off on good news tonight, I tend to believe it'll be a short-term investor exit and they'll come back over the next few days. If the news is bad -- and that would be a big surprise—it'll be REALLY bad. eBay, like Yahoo, is back. Unlike Yahoo, eBay offers some compelling opportunities for investors. We're not quite in "buy it now" territory for eBay; more like, "make an offer." eBay's lookin' good, and we'll know how good after the bell tonight.
Questions? Comments? TechCheck@cnbc.com