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S&P: Google Deal Leaves eBay "Well Positioned"

Plus: Analyst comments on Wal-Mart's August sales report

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From Standard & Poor's Equity Research
eBay (EBAY) : Reiterates 5 STARS (strong buy)
Analyst: Scott Kessler

eBay announces that Google (GOOG) will become its exclusive text-based advertising provider outside the U.S. The companies also plan to globally integrate and launch click-to-call advertising functionality within eBay's marketplaces and Google's search platform. eBay's Skype will also distribute Google Toolbars. We think this new partnership will enable eBay to better monetize its international traffic and growth. Although we are skeptical about the near-term prospects for click-to-call, we believe eBay is well positioned with Skype and Google.

Google (GOOG) Class A Shares : Reiterates 4 STARS (buy)
Analyst: Scott Kessler

Google will become exclusive text-based advertising provider for eBay's (EBAY) international marketplaces. We view this this as another important win for Google just since Dec. 2005, following AOL and MySpace. And eBay's Skype, which has over 113 million users, will distribute Google Toolbars. Google also announces it will enable enterprises to provide its end-users with free private-label Gmail, Google Talk and Google Calendar. We think this could moderately boost adoption and usage of these applications, but that Google is best served by focusing on search and advertising.

Wal-Mart (WMT): Reiterates 5 STARS (strong buy)
Analyst: Joseph Agnese

Wal-Mart estimates August same-store sales were up 2.7%, a bit above our forecast and near the top of the company's 1%-3% guidance. We believe sales growth benefited as increased media spending for back-to-school shopping likely helped offset any weakness caused by high gas prices. Although growth is likely to be driven by higher ticket rather than increased traffic, we expect comparisons to improve through the end of fiscal 2007 (January) as the company achieves significant remodeling progress by the end of the October quarter. Our October-quarterand fiscal 2007 EPS estimates stay at 61 cents and $2.92, respectively, and our 12-month target price at $56.

All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report.
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