Analyst Saul Hansell at the New York Times intelligently recommends that Amazon buy eBay (AMZN/EBAY). We’ve thought this combination would make sense for years. In the past, however, it’s been impossible because eBay’s market cap has dwarfed Amazon’s and, rumour has it, eBay CEO Meg Whitman and Amazon CEO Jeff Bezos hate each other.
But now three things have changed:
- eBay’s mismanagement and lack of attention to its user interface have finally caught up to it, punishing its market value.
- Amazon has finally hit its stride, sending its own market value soaring.
- It has become clear–to us at least–that eBay CEO Meg Whitman should retire (whether or not the companies combine), which eliminates the personality clash and makes leadership a non-issue.
The combination makes sense because Amazon’s strengths have always been eBay’s weaknesses: service and site interface. eBay’s global network effects, meanwhile, though much diminished in recent years, would make the combined company the world’s dominant commerce platform.
- First, as an Amazon shareholder, I would be disappointed with anything less than a 50/50 merger, at least until eBay proves that it can deal with its current problems and get its mojo back (and I say that as an eBay shareholder, too). But right now, Amazon’s market cap is still smaller than eBay’s.
- Second, until eBay’s CEO situation is resolved, the concept is probably moot. (There is no way the companies will merge with Meg still at the helm, as her immediate departure thereafter would leave no interpretation possible other than that she had been unceremoniously dumped).
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