Skip to main content

Updated from 2:34 p.m. EST

The morning after investors drove



stock down 19% in one of the darkest days in the stock's history, eBay spoke back to investors.

Or rather, it spoke back to some of them.

At 10 a.m. EST, the online auction pioneer made its CEO Meg Whitman and its CFO Rajiv Dutta available on a one-hour conference call organized by Goldman Sachs and hosted by its e-commerce analyst Anthony Noto. eBay later posted a phone number on its Web site allowing the public to listen to a recording of the call, but outsiders couldn't submit any questions.

Goldman clients such as TIAA/CREF, Waddell & Reed and Genesis Capital Management were allowed to address Whitman and Dutta directly. And they had an edge by hearing the responses first: at one point, eBay's stock was trading as high as $88.09 about an hour after the live conference call ended Friday morning, up 6% from the Thursday close of $83.33. eBay ended the day up 3% at 86.05.

That the call was restricted to Goldman clients angered other investors. "Maybe you shouldn't allow everyone to ask questions, but the call should have been made immediately available on eBay's Web site," said a fuming hedge fund manager who has held eBay shares in the past and may do so in the future.

"I'm a little surprised by all this," says Hani Durzy, a spokesman for eBay. "There wasn't anything said that wasn't already public information in our earnings announcement." Durzy said it made a playback of the call available on its Web site at 11:45 a.m. EST, about 45 minutes after it ended. A transcript of the call will also be available by the end of the day Friday, he said.

Investment banks like Goldman routinely allow their clients to have access to corporate executives, whether through conference calls or investment conferences. It's up to the company not to make any disclosures at those meetings that could move the stock. "We organize calls for clients. We don't organize calls for the public," says a Goldman spokesman. "That's common practice on Wall Street."

Regulation FD bars companies from delivering "material" information to select investors or analysts. Its definition of "material" is vague, and seems to trip alarm wires at the

Securities and Exchange Commission

when it's information about earnings guidance, new products or developments regarding customers, stock splits or management changes.

During the Friday call, eBay disclosed none of those, but instead drilled deeper into disclosures it made in its

Wednesday earnings call, such as investments in PayPal and China. The call was clearly intended as a handholding gesture, a diplomatic salve for any investors who may have started to think that eBay jumped a financial shark with its fourth-quarter report.

So eBay is safe on the Regulation FD question -- it's highly unlikely the SEC will consider taking action on the call. But anger from investors isn't what the company needs during a week when eBay has already heard from thousands of customers peeved over its decision to raise listing fees on its site.

"Holding this conference call says the company is more interested in its larger shareholders than in its smaller ones who have just as much right to hear from its management," said another fund manager at a major financial firm.

Will eBay allow more investors in on the live call next time? "I don't want to speculate on every single conversation we'll be having in the future," said Durzy. "All earnings calls will be open to everyone in the future, as they have always been. We'll continue to follow the rules we've been following all along."

But if eBay's approach hasn't changed, something about the company has. All the things that eBay has been hammered on this week -- raising fees, missing its earnings number, speaking with a select crowd of investors -- are things it's done in the past without any significant reaction. The halo effect that followed eBay for so long looks today more like a black-hole effect.

Maybe some disgruntled customer put a hex on the company, or maybe there's a retrograde planet somewhere in the skies. But for this week at least, the company that could do no wrong can't seem to do anything right.