Trade Me (TME)

[Jaa]

Ebay seems to have allowed them almost free reign in NZ. Maybe that will change someday?

As for the site? Expensive and not enough control over some of the numpties that use it. Just look at 'walters' feedback. http://www.trademe.co.nz/Members/Fee...member=1581467
Why are people like that allowed to even log on beats me.

I've always assumed eBay and Trademe have a tacit do not compete agreement covering NZ & Aus.

Trademe should have expanded into Australia while they were owned by Fairfax, they had the technology and Fairfax the marketing muscle and the distribution. Low entry cost with a potential very high return.

They should have backed themselves rather than been intimated by any response by eBay to set up in NZ.

[Balance]

oh my bleading heart. There have been several competitors, ebay, telecom's ferrit, some other one's I can't remember, and then wheedle or whatever.

This is a business - just like AIA, SKC, NZX, XRO, any of them - they charge what they can! Trademe has a fantastic business. If that upsets you too bad.

You miss the point.

TME may have in your view a fantastic business - what has been shown with its real estate listings business however is that it cannot charge what it can. It has had to bring its fees back into line but has lost market share which it is unlikely to regain.

One thing about a good business is that you do not bugger it up by overcharging.

NZX did the same thing a number of years back - trying to increase its listing fees but backed down real quick after a few of the bog companies threatened action.

Does not upset me one iota - but not good for TME shareholders.

[winner69]

Whatever people think Trade Me a real money making machine

$80m profit on turnover of $180m is pretty good

[modandm]

Quick take

Revenues up 10%, flat in general items (as per my assumptions). EBITDA +4.3%, NPAT up 1.9% in a tough year when expenses are rising fast.

Forecast for double digit revenue growth, but subdued EBITDA growth (I read as 5-7%) is a little weak, but cash generation is rising better than that.

Overall I am quite satisfied and will add today. Will come back with more detailed analysis in a few weeks.

[modandm]

To put this 'bad' result and TME's troubles (as some imagine) in perspective - SKC which trades at near the same multiple despite carrying much more debt and being far more capital intensive reported the following recently:

The casino company's annual results posted to the NZX this morning reported a 4.8 per cent decline in revenue, to $821.5 million, and a 22.6 per cent drop in net profits after tax, to $98.5m

The stock went up!

[warthog]

TME have taken a few costs this last year, but as winner points out, underlying their business is a cash-generating machine.

[McGyro]

No question TME is a good money making machine.
The problem with TME appears to be what they do with the money that they make.
From a position of absolute power and everyones darling several years ago, they have become a hated necessity like Telecom used to be.
Then they started simultaneously jacking up rates and reducing service quality in order to make more money which was wasted on silly ventures; not even passed on to shareholders.
This poor direction suggests a fundamental problem with the board.
Previously eBay wouldnt have been seriously interested in expanding to NZ probably because of the strength and efficiency of the competition. Is this still the case?
I'll be selling TME on the next rise if the board doesnt get its act together and make itself more desirable to customers and shareholders alike.

[modandm]

No question TME is a good money making machine.
The problem with TME appears to be what they do with the money that they make.
From a position of absolute power and everyones darling several years ago, they have become a hated necessity like Telecom used to be.
Then they started simultaneously jacking up rates and reducing service quality in order to make more money which was wasted on silly ventures; not even passed on to shareholders.
This poor direction suggests a fundamental problem with the board.
Previously eBay wouldnt have been seriously interested in expanding to NZ probably because of the strength and efficiency of the competition. Is this still the case?
I'll be selling TME on the next rise if the board doesnt get its act together and make itself more desirable to customers and shareholders alike.

Where do you come up with this?

1 they are not hated - otherwise they wouldn't post 10% revenue growth
2 they haven't reduced service quality - in fact 26% expense growth points to rising investment to improve the website apps and general customer experience
3 what silly ventures? they are paying a healthy dividend to shareholders you idiot!
4 the board is excellent and investing for the long term, as opposed to maximizing short term results - i commend that
5 eBay pulled out, Wheedle failed - there is no emerging threat

Please sell because you are clueless and don't appreciate the company you own. Your beyond belief.

[tzbang]

I feel like TM will slowly turn into the YellowPages; getting to a point where everyone hates them but continue to use them because everyone uses them.. until they stop and then it's all over. TM's attitude is similar to when YellowPages were at the top of their game; charging an arm or a leg for a crappy advertisement with the price justification based purely on viewer numbers.

That said, I think the reason why many challengers to TM have failed is that they rely solely on cheaper fees to lure people over. A lot of people on TM (like myself) don't like the fees - but don't really care. Most of the stuff I sell on TM I just want to get rid of, maximising dollars isn't the priority - getting that old couch out of my house is. So we continue to put up with the fees.

[modandm]

picked up just over 14k thanks.

When broker upgrades start coming through next week I will let you know -

I'm here for the long haul, what the shares do in the next month means little to me - markets are inefficient and short-sighted.

To invest successfully you have to be prepared to go against the crowd, nobody wanted AIR shares 2 years ago either... its an airline!