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16 Oct 2008 06:00
The online auction house eBay has announced plans to cut more than 1 000 jobs, or 10% of its global workforce, as it looks to save $150-million a year in the face of slowing sales, the latest evidence that gloom in the world economy is starting to hit major dotcom companies.
But the company also shocked Wall Street by announcing it was spending $1,3-billion on acquisitions—including $945-million on Bill Me Later, which lets United States shoppers make purchases online or by phone without the need for a credit card—to bolster its PayPal payments operation.
It is also buying a Danish online classifieds site, dba.dk, and a vehicles website, bilbasen.dk, for $390-million.
The auction house’s chief executive, John Donahoe, admitted that given the state of financial markets, “to some it may seem counter-intuitive to be making these deals, but we believe it is an appropriate time to bring these companies into our portfolio”. He stressed that eBay’s financing was strong, but he admitted “the economy and strong dollar” were hurting the business.
Three months ago eBay announced its slowest sales growth since it went public a decade ago.
It will announce third-quarter results next week.
The company refused to give details of where its 1 000 job losses—plus a reduction in temporary and contract staff—would fall but said it would result in a restructuring charge of $70-million to $80-million, which it will take in its fourth quarter.
The job losses have been rumoured for some time, but eBay’s sudden decision to go on the acquisition trail surprised many on Wall Street, especially as its deals come in the face of growing concern about the US economy.
Bill Me Later has agreements with 1 000 retailers, which use it on their websites or in their phone sales departments. More than four million people have signed up, many of whom use it because they are reluctant to give credit card or other bank details online.—
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