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Finance: Before bidding: Take stock of eBay stock

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PHUKET: While you are probably familiar with eBay as a great place for deals on everything imaginable, you might not be familiar with the large cap internet auction stock as an investment.

However, there are some compelling reasons why investors should be taking a closer look at the stock right now.

For starters, and at the end of last September, eBay announced it would create two independent public companies, eBay and PayPal, in the second half of this year.

Investors with a long memory will remember that PayPal had gone public in February 2002 at a price of USD$13 per share to raise $70.2 million; but just a few months later (in July 2002), it merged with eBay in a US$1.5 billion deal and was de-listed.

It’s not clear what exactly triggered the decision to spin off PayPal, but it might have to do with eBay failing to receive placement in the new Apple Pay payments offering – possibly because of a deal with Samsung on a fingerprint-reading payment system which may have angered Apple.

It’s also worth mentioning that in early 2014, eBay and activist investor Carl Icahn had reached an agreement where the latter retracted his proposal to split off PayPal in return for appointing one of his candidates to the board and then expanding the number of independent directors to 10 on the 12-seat board.

After the split was announced, analysts were initially optimistic, but then the reality set in that it will take some time for the split to be done (possibly at the beginning of Q3 2015) with significant operational improvements for both companies not expected until after the separation is completed. Likewise, there are upfront costs that will hit the bottom line and there is always the risk that operational improvements or cost savings ended up being a mirage.

Nevertheless, and as a standalone company, eBay could be in a better position to return cash to shareholders in the form of dividends or stock buybacks. An independent PayPal will also be much more appealing to potential customers like Amazon.com who compete with eBay, have more freedom to aggressively take on Apple Pay and could even once again become an acquisition target.

On the other hand, PayPal could see some profit leakage to eBay with any commercial agreement between the two likely favoring the latter over the former – who would now be free to execute agreements with other payment services.

As for share performance, eBay has generally traded between the US$50 and US$60 level since the start of 2013, while each time this year when shares looked as though they would break lower, the stock would attract more buyers and instead move a bit higher.

In May, shares finally broke above US$60 to hit an all time high of US$63.23 in early June, as institutional buyers bought bullish calls and call spreads while selling bearish puts.

Ultimately though, it will be up to the market to decide on a proper share valuation for eBay and PayPal as separate companies; but with the spin-off date getting closer, many investors will, rightly or wrongly, view owning shares of two well-known brands as being better than owning shares of only one.

Given that stock splits also tend to attract more buyers before the actual split date, there’s good reason to believe shares of eBay will continue to move higher until the PayPal separation is completed.

Before you buy any shares of eBay, you will need to determine what, if any exposure, you might already have to the stock, as it tends to be widely held in exchange-traded funds and other funds.

For that reason, it’s always a good idea to consult with an investment adviser before making any individual stock purchase, to help you determine just how much actual exposure you have to the stock and what the right asset allocation is for your portfolio.

Don Freeman,BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years of experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Don can be reached at 089-970-5795 or email: freemancapital@gmail.com.

— Don Freeman

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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