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 5½-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.
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
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Comments
So let us understand what is really happening here, e bay is felt by any seller or buyer or customer that they are understaffed to help with even the basic needs. This is strange given the fact that it is felt by most sellers and buyers that the company is understaffed to Handel there basic concerns. Anyone who has ever used paypal or e bay and had a problem that needed to be addressed and looked for a contact for the company have been surprised to find out that a company this size can not be contacted. This is a real disadvantage of e bay vs Goggle, Amazon or Ubid, sign up for U bid and a representative contacts you, gives you a phone number and a "welcome aboard" person to call and congratulate you for coming to there site to buy or sell. WOW! Sign up for goggle add words and you can talk to a staff member who is knowledgeable and empowered to help you. With ebay, the contact numbers are hidden. Many times the phone numbers will be posted by others who have experienced the frustration of having a problem that must be dealt with in person rather than over form e mails that do not answer the question that was asked. But in every case, the phone number gets changed, the new number not forwarded or announced, or disconnected with no forwarding number message. So my question is how is cutting staff going to help them overcome this shortcoming in the market place when most offer support and they do not? E bay will supply sellers with a phone number if they become "powersellers", that is if they are being paid, but call any of these "powerseller managers" and ask the same exact question to 10 different "account managers" and it is my personal experience, as well as a complaint of many sellers, you will receive 10 different answers. In addition to this, the "account manager" has no tools to help as they are not empowered to do anything but to pass on your issue to another department.
I wonder how many advisers/analyses who follow the market know about the 3 month aggressive plan e bay has put in place to push away an estimated 4.5 billion per year in fees charged? Maybe they have, I will be the first to admit they are smarter than I am, my degree is in marketing, not finance, but I have been a buyer and seller for 10 years and may see some things that analyses do not see. I can see how it would be difficult to see the effects of a policy that has only been aggressively implemented in the past 3 months. I know everyone has heard about buyers not being able to find something on the site, sellers not being able to sell things causing sales to drop dramatically. Every one has heard of policy change in the core business, but I do wonder how many really know what has gone on. This is a company who is very good at keeping secrete its problems. This is a lack of cash flow not recognized by e bay at this point, they are a cash rich company. It will be a large challenge to get back that kind of revenue overseas.
The big picture is understandable, get rid of the bottom 10% of sellers and bring 35% increase in buyers. The problem is the system to measure the bottom 10% if flawed and the 35% increase in buyers is not realized. Sellers fell that this policy has brought the wrong kind of buyer, the buyers who have searched can not find what they are looking for and are forced to look at country cd's while looking for a yellow vase. It is believed that e bay gained the market share it did because of its easy powerful search platform it had for over 10 years.
It should be clear, I am a wholesaler and not a writer or a stock expert, but I have a first hand inside look having been a powerseller for over 10 years, 1.7 million per year sales and account for $156,000 paid to e bay per year for seller fees, this is the bases in which e bay shows profit or loss in a great way, this does not account for paypal fees charged, seller manager pro, e bay stores.
An estimated 70,000 - 80,000 eBay sellers have been suspended due to aggressive, "at there discretion" , flawed policy. These are the large sellers, most pay an excess of $10,000 per month in site fees. This is an estimated loss, lets just take an average of $5000 per month, for 70,000 sellers that is $350,000,000 per month or 4,200,000,000 per year of fee losses based on these educated guesses as e bay does not release information about how many or how much it may have damaged itself with these flawed changes. Maybe the current stock price will, the economy has caused a drop, but the numbers show it was dropping dramatically during the fees being raised and during the implementation of this policy over the last 3 months. Only part of this policy can be read on there site, most of it is "at discretion" with no conformity.
Anyone considering investing or putting time into future sales may want to take a look at the aggressive policy's they have put in place, there are little to no direct policy as there has been for the last 10 years, it is now "at there discretion" rather than a written or qualitative policy in many cases. This is making the company policy as un uniform as it has ever been. Even when the rules were written for all to see, there were interpretation issues, however, now it is just up to the person answering the phone or sending the e mail and no room for improvement or debate to better or change. Although communication has always been an issue for E bays customers as well as sellers on message boards complain how hard it is to get in touch with them and when you do no one on the other end seems to be empowered to help or care to do little more than quote out of the corporate handbook offered in form letters and help pages. If you are as lucky as us to have been a powerseller, you can call and sometimes have your call returned within 3-4 business days and hope to be available at the time the call is returned, you can ask the same question to 10 different e bay "officials" and get 10 different answers that do not relate to one another. This is not a speculation, this is based on personal experience as well as discussions with other large sellers. They have turned a blind eye to its sellers and buyers alike. I wouldn't be leaving if there was any good reason to stay.
I admit, service needed to be better, customer service is something that all should be striving to improve, there is a way to do that without destroying the e bay fabric that has worked so well in the past. I have a business to run, so there is not enough time to go into all details of in site, there are many dissatisfied sellers (who drive e bays profit) and dissatisfied buyers (who drive the sellers profit) and it does not take a MBA to fugue out the future.
E bay has done a poor job or emplaning the new changes to its buyers, sellers only after a few months of effect, some loosing there e bay business because of improper, unmonitored data, is still learning and it seems no one knows the answers even at the top account managers level. Its buyers do not realize that the DSR DETAILED SELLER RATING, the 5 stars under the feedback rating is not based on a 100 point scale like every other system in the free world. For example, from 1 to 5, 1 is poor, 3 is average and 5 is excellent. With e bay, 4,5 is average and 5 is good, I am glad they didn't have my math teachers in Collage. So many times buyers rate a 3 when they don't realize they are giving the seller a unacceptable rating that could potentially suspend his/her account from e bay as so many has been suspended in the last 3 months because of improper data that has been now used as the bible of e bay to rate seller performance. It should also be noted that a flaw in the data of the 5 star DSR is that if a customer is happy, they fell that leaving positive feedback served its purpose and they have caused a positive vote to the seller, e bay has not educated the buyer, so they do not leave a star rating at all, and are not required to and a large % do not, but leave a positive feedback as it is not required. But the buyer who is mad and is leaving hasty feedback will be more than motivated to leave a 1 or 2 for all stars. For this reason, good sellers offering great service and products are being suspended from e bay by record numbers, this cuts the life cord of the seller as well as e bay.
Ebay has ruined their market flair for both buyers and sellers. Too many restricting rule changes, increased charges, paypal demands, seller ratings. This has ultimately destroyed their bottom line.
Don't think eBay and its payment system engage in unfair, at the very least unethical or even illegal business practices? Retailers are asking for congress to crack down on organized computer crimes, but eBay, said "they would be unfairly targeted in the proposed legislation" Read article from link below:
http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=200809...
Ebay is definitely a stock headed down down. The Wall Street analyst's who cover Ebay are finding out what is really going on because the sellers who actually use ebay have been seeing it for the past several years as seen by past message/bogs. This has been especially true in the past 6 months. Anytime a company treats their customers with little or no concern, it's not a good sign for the future.
It is speculated that the Standard & Poors rating will be updating soon, because of e bays unprecedented fast and aggressive changes made in the last couple of months have not given any room for changes of amindments of ratings yet, but I will assure you they are coming the changes were simply done so fast and aggressive that ratings have not had time to catch up. It would be advisable to keep a close eye on this in a few months when aggressive policy changes reach the rating level.
I have a dedicated special interest and hope they turn themselves around, but it is going to take some quick and correct policy change to undo what has been done in what would be considered by many as well as a powerseller account manager spoken to as "the most aggressive change e bay has ever done". This policy change had the company treating its long term sellers and buyers like criminals. Taking away businesses from sellers by the flawed, aggressive policy change unfair to sellers and buyers.
STR is dropping like a rock. The Best Match search is fatally flawed and $0.35 listings are not going to fix that. Buyers can't find anything. Sellers can't sell and are being abused both by eBay with the flawed DSR system, and by bottom feeding scammer/buyers, because there is NO seller protection. The buyers agree to the sellers terms by static link contract when they bid, just as sellers agree to e bay and paypals, but are not held to the policy that is the basics of a fair transaction. The new policy changes has driven off both buyers and sellers alike. It has attracted the wrong kind of buyer and made the site a breading ground for unfair transactions to sellers and buyers. Sellers are paralyzed by policy, sellers own policy has been abused by the new ebay policy changes. There is also NO customer service provided to sellers or buyers by ebay or paypal. Sellers of the unique items that made eBay famous (and who paid listing fees) are leaving in droves, while eBay brokers deals with corporate sellers of new stuff you can get anywhere who don't pay listing fees. And their buyers are following them. Watch the Q3 figures. They must answer to its customers and its investors soon. The payment system can only hold them up and serve as a cash cow but for so long.
Many sellers do not realize how eBay can legally stand on the fact that they are a "venue" when they set policy that makes all the decisions of how the seller sells, take payments, charge for shipping, return policy's, they become more of a "landlord" or employer it would seem to most.
Ebay was the best online selling platform, had market position of a virtual monopoly, but this trend is slowly changing as competition is taking advantage of this situation. It is unclear to me how cutting jobs and leaving positions open is going to clear up this company's core issues that have not been addressed since this 6 months of faulty policy, 3 months aggressively, has been implemented.
They bought a company who is going to do financing during a time when financing has put our country, and the world, in a unfavorable position, this when they have major core issues that need addressing. It is hard to believe a company can position itself so unfavorably inside 6 months.
I have watched the stock market, and ebay is the first that I have seen to cut completely in half. (Aside from stock worth less than a dollar) I think ebay WILL CRASH within a year if they keep going the way they are. I think ebay needs to go back to the way they were 5 years ago if they want to servive.
DONAHOE is the issue. Years from now (Likely sooner than you think) there will be a wikipedia listing for "The man who ruined eBay". That is Donahoe. A man who just doesn't understand eBay and NEVER WILL. A man who represents the current greed, corruption, and >incompetance< that pervades corporate America at the moment. Hell, eBay just brought in execs/people from Home Depot and that "den of thieves". Doesn't that tell you something?? Where are all the smart people today? Answer: They just make people like they used to.
They just DONT make people like they used to.
I'm not a financial person, but it is quite clear to me that Ebay as we all knew it back in the late 90s and the early part of this decade is over. Obviously Donahoe and his cohorts want to abandon the concept that made Ebay so prosperous for a new business model. Hence the quick action and policies to push smaller sellers as well as certain powersellers out of Ebay so they can implement their new strategy. Clearly, they can do whatever the hell they want to do, and they will. However, I look at it like this - it just opens up new opportunities to buy and sell on the web, am sure many smaller web player have been waiting on this and are more then ready to fill that void. As far as Ebay new strategic plan is concerned, the timing couldn't be worst.
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