eBay Plans to Cut 10 Pct of Jobs

By Geoff Duncan October 6, 2008

eBay Plans to Cut 10 Pct of Jobs

Online auction powerhouse eBay has announced it is planning to cut some 10 percent of its worldwide workforce in a move to cut costs and streamline operations. At the same time, the company is snapping up online payment service Bill Me Later and Danish sites dba.dk and bilbasen.dk, which handle classified ads and vehicle sales, respectively. And the moves aren’t cheap: eBay thinks the layoffs will cost $70 to $80 million in pre-tax charges, while it’s paying paying $945 million ($820 million in case and $125 million in options) for Bill Me Later, and another $390 million in cash for the Danish sites. Total outlay for the deals will exceed $1.3 billion.

“We are making aggressive moves to strengthen our leadership positions in e-commerce and payments to competitively position our company for long-term growth,” said eBay president and CEO John Donahoe, in a statement. “Bill Me Later is a perfect complement to our portfolio, a company that belongs with PayPal. [..] Our classifieds acquisition gives us another market leadership position in Europe for this rapidly growing part of our portfolio.””

The changes come as eBay sees its third quarter revenue landing at the low end of its earlier $2.1 to $2.5 billion forecast for the quarter, although the company says its profits will exceed expectations. (Charges for the layoffs and restructuring will primarily land in the fourth quarter of 2008.)

eBay plans to integrate Bill Me Later with online payment service PayPal, with the combined operation to bring in an estimated $150 million per year. The Bill Me Later acquisition should close in the fourth quarter, and begin adding to eBay’s bottom line in 2011.

Letting go of about 10 percent of its workforce means eBay will be saying goodbye to about 1,000 employees, along with several hundred temporary workers.

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