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eBay To Cut Workforce By 10%

The auction site also announced it would acquire online billing company Bill Me Later and Denmark classified ad sites Dba.dk and Bilbasen.dk.
EBay on Monday said it would cut its workforce by about 10%, or 1,000 employees, in order to streamline operations and make the company more competitive.

In addition, the auction site said it would acquire online billing company Bill Me Later for $820 million in cash and about $125 million in outstanding options. EBay also said it has bought Denmark classified ads site Dba.dk and vehicles site Bilbasen.dk for $390 million in cash.

EBay's workforce reduction would go beyond the 1,000 employees and also include several hundred temporary workers and the reduction of open positions. The global cuts are meant to "simplify and streamline eBay's organization, improve the company's cost structure, and strengthen the overall competitiveness of the company's existing businesses," the company said. EBay expects the cuts to result in pretax restructuring charges of $70 million to $80 million, most of which will be recorded in the current quarter.

"While never an easy decision to make, these reductions will help improve our operations and strengthen our ability to continue investing in growth," John Donahoe, president and chief executive of eBay, said in a statement.

On the acquisitions, Donahoe said Bill Me Later is a "perfect complement" to online payments service PayPal, which eBay also owns. "We are making aggressive moves to strengthen our leadership positions in e-commerce and payments to competitively position our company for long-term growth."

The acquisitions of the two classified sites gives eBay technology and expertise that it can leverage across its classifieds portfolio, which includes sites in Canada, Australia, Germany, Japan, the United Kingdom, and the United States, Donahoe said. "Our classifieds acquisition gives us another market leadership position in Europe for this rapidly growing part of our portfolio."

EBay is an investor in online classifieds site Craigslist. The troubled investment, however, has led to lawsuits between the two companies. The suits are pending.

Finally, eBay reported that it expects to hit the low end of its third-quarter 2008 revenue guidance, but exceed its earnings guidance. The company had forecast revenue from $2.1 billion to $2.15 billion and earnings between 30 cents and 32 cents a share. EBay is scheduled to release third-quarter earnings Oct. 15.

Auctions in the second quarter drove 57% of eBay's revenue, but growth in the area has been slow. As a result, the company has increased its focus on fixed-price sales. To encourage such sales, eBay in August cut its listing fees by up to 91%. The company is facing growing competition in the e-commerce market, particularly from Amazon.com and Google.