Filed under: Rants and raves, Competitive strategy, Cisco Systems (CSCO), eBay (EBAY), Amazon.com (AMZN), AutoNation Inc (AN), Serious Money, Technology

This is the fourth in a four part series which I hope gives buyers, sellers, shareholders and dare I say management a platform for discussion.

This week I envisioned an eBay (NASADQ: EBAY) without Skype, eBay Motors and Paypal. Everything goes to the highest bidder, excluding handling and delivery of course.

While EBay might benefit from selling Skype and Motors, considering they might be worth more to others like Cisco Systems (NASDAQ: CSCO) and AutoNation Inc. (NYSE:AN), it should not sell PayPal unless it is contemplating a merger, since the acquiring company most likely would want PayPal to be an integral part of any deal.

Ebay is going through some growing pains right now but it is still a primary center of activity on the web. Although there are many disgruntled sellers that have left the site or been forced off because of the constant changes in the rules, it really has only one main rival and that is Amazon.com (NASDAQ: AMZN).

Over the course of time, these sites will become more alike than they are different. Amazon evolved from an on-line book seller into the largest retailer on the web. Ebay has evolved from a mom and pop auction and trading site to an outlet for selling everything under the sun. And the barriers to entry seem high for a third player in this space, although the market has been surprised before.

It seems to me that eBay has done a poor job of interfacing with the disenchanted. On the other hand eBay is not a baby sitter for these businesses. If the business is not viable on eBay then perhaps it might be viable on another site. If it is not viable on another site, well, then maybe it is not really viable, or it's viability has diminished. The frequent users of eBay that I have spoken to think the site has become "cleaner and easier to use". But that is only a small sampling and may prove nothing.

Despite all the criticism being flung at eBAy it remains a strong business. I would even argue that ebay, right now, is a far better investment than it's rival Amazon.

Ebay is trading at a P/E ratio of 7.7 while Amazon is trading at a P/E of 29, ridiculous by my book; see Amazon downgraded by Citi -- call me at $30.

eBay has acquired other companies over the years that have contributed to its bottom line and overall growth. These include Half.com, Rent.com, Shopping.com, Stub-Hub and StumbleUpon. This process will not stop. Every company goes through growing pains and eBay is much less traditional than Amazon in a very tough market place.

What is the better investment today?

The following are links to the first three stories

Should eBay seek a merger or stay independent?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of EBAY.

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