Ebay CEO: Layoffs Not Due to Weak Economy
The decline in economy, stocks at all time lows, companies closing their doors or being bought out by larger entities. It’s all chaos right now, at least for some people.
Online marketplace giant Ebay has announced that it is cutting 10 percent (roughly 1,600 jobs) from its workforce.
Ebay claims this is the largest round of dismissals ever. About 1,000 full-time employees will be asked to leave, the remaining amounts will consist mainly of temporary and part-time workers. Ebay will also be closing the lid on any open positions currently available.
John Donahoe, Ebay chief executive, claimed in an interview that the cuts are not a reaction to the weak economy. Donahoe, who took over as CEO from Meg Whitman back in March of this year said Ebay’s leadership had been considering the cuts since mid-summer. The layoffs will enable Ebay to be “more responsive and nimble” and bring opportunities to reinvest in development and growth in areas such as PayPal. Quoting Donahoe:
“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,”
This is the second round of cuts for Ebay this year – the first being rather small at 125 positions in Europe and 70 positions in San Jose, California – eBay headquarters. eBay anticipates restructuring charges to come in at $70 million to $80 million in relation to the job cuts. The end result will be $150 million in annual cost savings.
Donahoe did acknowledge that the weak economy is hurting Ebay’s business. Third-quarter revenue will be at the lowest end of their expectation scale – however being higher than previously expected back in July. Ebay shares fell $2.05, 11 percent, to $16.89 in afternoon trading. The shares have lost roughly half of their value this year alone.
On a side note, eBay mentioned on Monday that they will be purchasing Bill Me Later. Bill Me Later is a privately held company that lets online retailers give shoppers credit without detailed applications forms. The purchase is for about US$820 million in cash and US$125 million in outstanding options. Ebay plans to incorporate its Bill Me Later purchase into PayPal by the end of the year and its options available to consumers by the second half of 2009.
Ebay may be eyeballing this purchase as a means to attract buyers into larger purchases through the site in a safe and convenient manner. President Scott Thompson claims that people who use Bill Me Later tend to make much larger purchases according to statistical data.
Ebay has also purchased the Danish classified-ad site dba.dk and vehicles site bilbasen.dk for roughly US$390 million in cash. The acquisitions will add to eBay’s stable of classifieds sites such as Kijiji and Gumtree. According to Donahoe, 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 move. In times like this, strong companies have a potential to get stronger.”
Could the layoffs be due to a combination of the economy and the extra large purchases made by Ebay?
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Hold on tight. It's going to be quite a ride. People shouldn't live with their families' futures impacted by poor management at the company they work at, Wall Street, etc. Consider alternatives and the possibility that you can be self employed. Entrepreneurs are developed, not born. www.LikeSoup.com
5 years of negative equity with Whitman at the helm and the new guy could not turn it around.
Why don't they just be honest, it's because they're greedy.
bull heaves. the guy is running the company into the ground. their expected earnings are low because their sellers are leaving. this pigheaded CONSULTANT has no insight into his own business, just theories which he is experimenting with to the company's detriment.
get rid of the business people at the top (the consultants).
get some tech guys in to lead the platform.. look at google ffs. their culture is completely the opposite to ebay and they never cease to impress.
http://www.meanmachines.biz
Google is google, you can not compare anyone to google. They own the internet search market, and no one is even close to competing with them so they can afford to act all retarded.
If ebay did google style, ebay would go bankrupt tommorow.
The real truth as to why ebay is firing 10% of it's workforce is that ebay management enjoys firing peons. They make a game out of it, setting the record for # of firings per hour and then trying to break that record.
I love it. Ebay got greedy and hiked the prices up for sellers and the sellers left and trashed ebay as best they could. Now Ebay is paying the price for over-regulation and high fees. I hope they get replaced with their nearest competitors. This is what happens when corporate America gets hold of a private company. The execs don't care either because in their 2 year max stint as an Ebay exec, they will spend 1.5 years of it hiking up the fees and tightening regulation like idiots and the remaining .5 years they have left will be spent spamming their resumes all over the country entertaining offers from the next unsuspecting private company. What a shame.
The problems that eBay is facing goes to the core of their model. Since the beginning, they catered to their customers, the eBay Sellers who paid the fees, and gave them too much lea way to intimidate eBay Buyers with retaliatory feed back. Another offese to Buyers was an obscure arbitration method that protected Sellers most favored "Power Seller" status even after they cheated many buyers. (also to note, there isn't a "Power Buyers" status.)
It seems that for years there was a sucker born every minute who took a stab at buying on eBay. It used to be said that everyone has worked at McDonald's, likewise you could say that everyone has been cheated on a auction that they won on eBay.
After the callous treatment from sellers and eBay customer service, or lack of, Buyers took their money elsewhere; that had to be expected sooner or later. When the Buyers left, guess what? The Sellers followed suit and quit selling or cut back on listings. As listings decreased so did profits. EBay's current remedies of changing feed back and banning the worst performing Sellers is an attempt to lure Buyers back to the site by increasing the overall performance of the Sellers, thereby increasing Buyer satisfaction.
EBay is altering their model in a way that might please any economics professor. You can make a lot of money by renting boots at the market place, (like eBay does) but if there are no buyers at that market the sellers won't be interested in renting your space. eBay has finally figured out who is throwing those babies into the river and they want to get him to stop. I wonder if it is too little too late to bring buyers back to the site?
The increased fees and mandatory PayPal seems to be little more than plucking the goose in order to pay for the mistakes of the past. Those who are squawking the loudest may be some of the most responsible for the current crisis.
Yeah maybe ebay is going into the toilet partially because of the economy, but more so from their own actions. With much higher fees now that average out to 15-20 percent of the item sell price, no one wants to list anymore. Every time I've checked for something I want to buy or need, I see less and less auction and even buy it now choices when I had a lot of choice a year prior. My question is where have all the sellers gone to??, so I can follow them there, because they sure have seem to left ebay and I want auctions, not buy it now BS from some lame mega corp selling 10,000 items a month with lame customer service. Keep your cruddy GM used cars (GM = Gross Mismanagement, so a perfect match for Ebay). I also don't want to deal with paypal anymore, which has now just become a defacto way for the government to scrutinize all your purchases. Who the heck needs that?!? The ebay party/ride is over for a lot of reasons but first and foremost, there is a kamikaze named donohue at the helm and his control hand is pointed straight down!
I find it rather wierd, that they've invested in dba.dk (the online version of a paper buy/sell magazine), and the dominant danish vehicle online marked site. They should've either created an ebay.dk or bought qxl.dk (danish equvivalent, though poor in quality in comparison).
Anyway from my experiences with ebay.de I believe Roger is right in his guesses for why ebay has the issues it does. But it is still the 'only real' online marked available to europeans. It is feature rich and has pretty much any feature you want. But it does have flaws ofcourse. I can only guess that less workforce means more flaws in future.