Payments & Communications Businesses Have Driven Down eBay's Margins (CHART)

eBay’s auction business has stumbled in recent years as buyers and sellers have opted for more direct-sales e-commerce models and have looked for alternative e-commerce platforms due to continued complaints about usability and customer service issues with the eBay Marketplace.  At the same time communications services like PayPal and Skype have grown healthily.

The result is a concern that has weighed on the eBay shares in recent years – margin erosion.  Consolidated EBITDA margins have decreased from about 41% in 2004 to about 35% in 2008.  This compares to Amazon’s margins, which have hovered in the 7.5% to 8.0% range during the same period.

How has this impacted stock performance?  Here is the comparison chart:

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