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July 15, 1998

NET AUCTIONEER EBAY FILES FOR $64M IPO

By CBR Staff Writer

eBay Inc, the internet-based one-to-one auction service has filed for its initial public offering to raise a maximum of $64.4m before expenses. When the company announced its new president and chief executive, Meg Whitman, in May she said, regarding a possible IPO, that the company not looking for financing at the moment: We don’t need the money, she said at the time (CI No 3,406). Two months later, presumably, eBay has decided to make hay why the sun still shines on internet stocks. The S-1 filing, filed with the SEC yesterday reveals a profitable company. In the six months to June 30, eBay recorded net income of $348,000 on revenues of $14.9m. For the year to December 31 1997 it did net income of $874,000 on revenues of $5.7m. Cash and equivalents as of June 30 were a healthy $10.7m. All in all, not the typical internet IPO. eBay connects hobbyists and collectors together, enabling them to hold auctions for the goods. Onsale Inc gas set up a rival service, Onsale Exchange and it also competes against Auction Universe, a Times-Mirror Company and Excite Inc. By the end of the first half eBay had upwards of 850,000 members holding more than 500,000 simultaneous auctions. The S-1 does not price the offering or say how many shares will be offered or for what purposes the money will be used. But it does say that the company does not expect the to raise any more for 18 months. However, it is hardly a surprise that eBay went public so quickly after appointing Whitman, at which point company founder Pierre Omidyar reverted to being chairman. In persuading Whitman to move from the east to the west coast, Omidyar must have convinced her of the long-term viability of eBay because she would have had quite a few other offers. Prior to eBay she was general manager of Hasbro Inc’s preschool division, and before that she was president and CEO of FTD Inc. Whitman has been granted 30.8% of the total options granted: 2.4 million shares at an exercise price of 20 cents a share. Some 10,725 shares will be sold by the eBay Foundation, which was established last month by the company for charitable donations. That represents 10% of the stock used to capitalize the foundation. The offering will be led by Goldman Sachs & co, which is joined by Donaldson, Lufkin & Jenrette Securities Corp, BancAmerica Robertson Stephens and BT Alex Brown.

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