eBay Cuts 1,600 Jobs, 10 Percent Of Its Work Force

NEW YORK - After a series of changes designed to draw more people to its online marketplace, eBay Inc.'s latest alteration is aimed at its own employees. The auction site operator said Monday it will cut about 1,600 jobs, 10 percent of its work force, in its largest round of dismissals ever.

About 1,000 full-time employees will be gone, while eBay will achieve the rest of the cuts by letting temporary and part-time workers go and by leaving open positions unfilled. EBay would not describe which positions would be cut, other than to say they will come across the company and around the world.

EBay Chief Executive John Donahoe said in an interview that the cuts were not a reaction to the weak economy. Investors were still disheartened, sending eBay shares to a 5 1/2-year low.

Donahoe, who took over as CEO from Meg Whitman in March, said eBay's leadership had been thinking about making the cuts since midsummer. The moves will make eBay "more responsive and nimble," he said, and will give it an opportunity to reinvest in growth areas like its online payments service PayPal and its classified-ads business -- both of which eBay augmented with acquisitions announced Monday.

"This is trying to position our company in the right way for the medium to longer term. I would say it is not a reaction to the short-term macro environment, or short-term pressures," Donahoe said.

EBay anticipates $70 million to $80 million in restructuring charges related to the job cuts, mostly in the fourth quarter. The company said the cuts will result in $150 million in annual cost savings.

This round of cuts is eBay's second this year. The company said in March that it would cut 125 positions in Europe and North America, including 70 jobs at its San Jose, Calif. headquarters.

Pacific Crest Securities analyst Steve Weinstein praised eBay for "taking proactive steps" that reflect "the challenging environment they're in." But he also lamented that the cuts indicate how much trouble eBay is having at igniting growth in its core business.

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EBay has struggled to match competition from other areas of e-commerce, with many consumers increasingly using more online retailers like Amazon.com Inc. that follow a more traditional selling model. In the second quarter, eBay's count of "active users" rose just 1.4 percent.

Already this year, eBay has altered the fees that vendors pay, its search results and its feedback system in an effort to improve the experience for buyers and keep them coming back. But the changes have also angered a number of sellers, some of whom have left the site.

Donahoe did acknowledge that the weak economy and the effects of the strengthening dollar are hurting eBay's business. Third-quarter revenue will be at the low end of the company's expectations. Nonetheless, eBay said its third-quarter earnings would be higher than it had predicted in July.

EBay's shares fell $1.05, 5.5 percent, to $17.89. The shares have lost about half their value this year.

EBay also said Monday that it will purchase Bill Me Later, a privately held company that lets online retailers give shoppers credit without detailed application forms, for about $820 million in cash and $125 million in outstanding options. The Timonium, Md.-based company is expected to become part of PayPal by the end of the year. Shoppers should be able to use the Bill Me Later service on eBay's sites in the second half of 2009, PayPal President Scott Thompson said in an interview.

EBay might see the purchase as a way to get consumers to buy more-expensive items through the site. Thompson noted that people using Bill Me Later tend to spend more on online retail sites.

"I think they're taking advantage of a good opportunity at this time," said Weinstein, the analyst. "It should help them do well in the payment business in the future."

EBay also said Monday that it purchased Danish classified-ad site dba.dk and vehicles site bilbasen.dk for about $390 million in cash. The sites add to eBay's stable of classifieds sites, which include Kijiji and Gumtree.

Donahoe said eBay went after Bill Me Later and the Danish sites now because it is "a good time for smart investors that focus on the long term to move."

"In times like this," he said, "strong companies have a potential to get stronger."

Comments

[avrillohan]

Why? make money..
http://moneymakemachine.blogspot.com

[JWakkaJane]

Did anybody else catch who McCain offerred as a replacement for Paulsenon that question during the debate?

hahaha

[kevmo]

YESSSSS !!!

You know what they say: the secret to Comedy is Timing! And McCain has never been funnier!

With his magazine article encouraging health care to become more like our financial industries, and then playing up Meg Whitman, I'd say that after November 4 his agent will be busy booking Johnny o the comedy club circuit.

[PollyTics]

Ebay was bordering on HORRID when it came to Customer Service, both for Sellers and Buyers, but now the place is an absurd and insulting place in which to do business. I have been a seller (and buyer) on eBay for about 6 years now and the last couple of years have proved to be going down the path of irresponsible leadership, but when John Donahoe took over this past year, eBay has become a venue in which it is almost impossible to do business much less try to make a profit.

The new fees and wretched policies have insulted Sellers beyond the pale and they truly just don't seem to care. I have about had it and am about to pull BOTH of our stores from eBay and go elsewhere. John Donahoe has actually declared he was embarrassed to be a part of eBay and has made disgraceful comments about their sellers, so why even bother? And this guy is supposed to KNOW what he's doing? Boy, did they ever get this hire WRONG!.

[kburlz]

I sell full time on ebay and I think they are starting to get the right idea. They got rid of the gallery fee and you can place fixed price ads for 35 cents for any price for up to 30 days. I really think it was Meg that was bringing the company down. She didn't get it at all.

[AmericanforChange]

Didn't John McCain say that Ebay is proof that the fundamentals of our economy is strong?

[MagisterLudi]

Ok, I got it. FEE BAY fired customer service employees to make the company more eh... nimble and responsive to customer service. right. Here' s a small hint--- LOWER LISTING PRICES.

[DuPageDem]

eBay's has gone out of its way to screw small sellers like myself who used to do a few hundred in business each month. The changes this past year are all about sucking up to big volume sellers, to the detriment of the rest of us. I gave up months ago and won't go back -- especially after seeing their CEO shill for John McSame at the Rethug convention. Craig's List is the way to go.

[bubbles3660]

If Ebay continues to fail will they finally put it up for sale on Ebay?

[MagisterLudi]

;-)

[Venom5809]

Rofl

[BerkeleyHills]

Thoughtful posts about the underground economy, great stuff. I have to admit I liked EBay at first for things I really never needed. A Concord turbine blade, oh! oh! Cripes... But it has become this shambling beast of a thing lately. Best to break it into many smaller divisions that work isolated from each other. Also, keep a weather eye on some of the more obscure house finance committees. Way, way too much tax revenue getting away and the companies bulwark of friends is updating resumes as I write this.

[threesacharm]

I used to sell all of the time. Kids clothes, outlet finds, household things. Ebay raised their auction prices so high that it ended up costing me to sell on ebay. And their feedback system is a mess! So many times I have come across things that I would have sold on ebay last year and now I just smile at the memory of a once great company, and move on.

[SantaFeStars]

Ebay is not the way it used to be when a seller could make a decent living. Now, the fees are so out of line that a seller makes almost zero profit. And, when they eliminated the feedback for some irresponsible or lying buyers, that was the last straw for me.

[MagisterLudi]

What you describe is the 7-11 business model. The franchisee makes minuscule per- item profit. Thus the store must create very high traffic to make any money. The 7-11 corp. is the main beneficiary in this model.

[divemate]

EBay will fail because the new management sees the very thing that made it great, as a negative. When the new CEO came in the first thing he said was " it looks like a flea market ". That was a stupid statement, of course it looks like a flea market that is it's appeal. There are thousands of online retail stores like Amazon but there was only one EBay. Then to make matters worse they changed the feedback structure so the seller could only leave a positive feedback for the buyer. That is stupid so now we know that the buyer is perfect and the only bad people on EBay are sellers. This guy was really short sighted and I am glad he is getting his come upins.

[fredamae]

dont both walmart And ebay support the Pubs?

[RnR]

The improvement to the search function is non-existant and includes a decrease in categories leading to search results which include items you are not looking for. It is irritating and time wasting for the user.

I had emailed them with complaints when they first instituted the "new improved" version. Their response was that their "experts" were in control. Well, I *use* it and don't have the time to search through upwards of 3000 "hits" when the original search function was perfect.

[AspenMan]

I think executives at Ebay ( because they are focused on the "company" ) tend to forget that the ONLY thing that really matters is the web site and how easy it is for users to navigate. When you make listing fees high, and make changes to the look of the site ( they have a new updated look that is pretty - but much harder to use ) you will drive customers away. If they want to continue to grow - make it SIMPLE.
1. Keep fees LOW
2. Keep the site SIMPLE
Just look at craigslist.org. They have a tiny staff - the site is easy to navigate - and of course it is free to post. The people at Ebay should remember that this is a SIMPLE idea - they should not muck it up.