WTF? This seller has other items - including a relatively heavy external SCSI CD-ROM drive - up for free shipping and low price. The eBay/PayPal fees will likely zero out the final bid price, and he'll lose at least $8 on the shipping.
The only explanation here is that this high-volume seller is churning stuff for cash-flow and feeback-bolstering reasons. And it's also possible he has access to no-cost shipping (i.e. perhaps he works for a large company and can scam off their shipping account without anyone noticing).
I think he does it to get bidding wars going. When you sell a large volume of items I don't think you care if you lose money on a few items but make a killing with the rest, all you are looking for is to be profitable overall and do some volume.
He currently has 402 items for auction, and a 6700 feedback (12000 total positives so he has plenty of return buyers).