eBay: Prepare For More De-Megification

Whoa, what’s gotten into eBay (EBAY)? Over the last few weeks, the company has announced plans to spin-off Skype, struck a deal to buy Gmarket (GMKT) and unloaded StumbleUpon back to its original owners.

The larger strategy, according to Bernstein Research analyst Jeffrey Lindsay, is to get back to their core marketplace strategy. In particular, he said in an interview with Tech Trader Daily, the company has revived a geographic diversification strategy, and will likely to use Gmarket as a platform to “have another go” at Japan and China. Lindsay notes that in the Meg Whitman era, the company’s Asian plans were badly executed, and they gave up. But under current CEO John Donahoe, they seem determined to try again.

Lindsay contends that Whitman had “glommed on businesses” on top of the core as a way of hiding its slowing growth rate. He adds that defining the company as an auction business was a serious mistake that distracted the company from expanding sales of fixed-price goods, and handed market share over to Amazon.com (AMZN). He notes that some of the advertising of the Whitman era focused on the excitement of winning auctions. “People wanted to buy stuff, they weren’t looking for excitement,” he says. “People just wanted to buy things online because it was convenient.”

Lindsay notes that eBay’s Internet Auction unit was the leading e-commerce provider in Korea until 2007, when upstart Gmarket came along and stole the market leadership position away. Buying Gmarket, he says, makes it far more likely that they will figure out how to succeed in Asia and China.

But there are other markets to conquer, and Lindsay says there are other companies which could be next on eBay’s target list as it presses its geographic expansion strategy. In particular, he thinks the company might want to buy MercadoLibre (MELI), a company which is basically a Latin American version of eBay, complete with its own payment service, as well as Tradus, a company which operates e-commerce sites in Europe under the QXL and Ricardo brands (among others), and which is now part of South Africa-based Naspers.

There are also some other bits the company might want to sell, including StubHub, its online ticket marketplace. He notes that ticket industry is in flux, and that would be a bunch of potential buyers if they decided to sell. In the long run, he says, it might he tough to stay in the ticketing business without diversifying into event production - which is a long way from the company’s roots.

The company has also tried bravely to make a dent in the online classified advertising market with its Kijiji unit, but has failed to gain any traction against the juggernaut that is Craig’s List. And while Lindsay notes that the company would no doubt be willing to buy Craig’s List for a princely sum, the site is not for sale.

As for Skype, he says the spinoff is a good idea, but that the company would probably prefer to sell the company privately if it could. He notes that Google has started its own communications service with Google Voice, and he contends the notion of Microsoft buying Skype is a long shot. Short of some other surprise bidder - a China-based player, perhaps - looks like the IPO plan will move forward.

For now, Lindsay maintains a $15.50 target and Market Perform rating on EBAY.

In today’s trading, EBAY is off 12 cents, to $14.29.