eBay doubles down on payments as it buys Bill Me Later; Lays off 1,000
Summary: EBay on Monday revamped its corporate portfolio laying off 1,000 workers, or 10 percent of its workforce, and buying online payment company Bill Me Later as well as a Denmark classifieds company.The layoffs were largely expected, but the Bill Me Later purchase for $820 million in cash and $125 million in outstanding options is notable (statement).
EBay on Monday revamped its corporate portfolio laying off 1,000 workers, or 10 percent of its workforce, and buying online payment company Bill Me Later as well as a Denmark classifieds company.
The layoffs were largely expected, but the Bill Me Later purchase for $820 million in cash and $125 million in outstanding options is notable (statement). Simply put, eBay is doubling down on Bill Me Later--a company that depends on evaluating credit risks--during a credit crunch. But coupling Bill Me Later, which counts Walmart.com, Toys R Us and Apple as customers, with PayPal gives eBay a great one-two punch in online payments. Bill Me Later's market share rivals PayPal and gives eBay a dominant position in online payments.
The message behind eBay's Bill Me Later acquisition: Auctions may be slowing but online payments are still growing strong. Could eBay be the Visa or Mastercard of online payments?
On a conference call detailing the Bill Me Later deal, eBay CEO John Donahoe said he's confident the company is on the right path. Donahoe has made PayPal a centerpiece of eBay's growth strategy. He has also revamped fees to get more inventory and sales volume on eBay.
Donahoe also disclosed that PayPal, which accounts for a third of eBay's revenue, is going after large merchants. "PayPal's total market is all e-commerce and it's just beginning," said Donahoe. "PayPal and Bill Me Later just go together. We have been talking for two years now. Bill Me Later brings a strong complementary merchant base, delivers a compelling consumer proposition and gives us leverage to lower transaction expenses."
On the conference call, Donahoe was asked why eBay went after Bill Me Later now rather than later when valuations for privately held companies was falling. Donahoe noted that the time was right, but another thread could be that the Bill Me Later acquisition was defensive as well as offensive. To wit: Amazon late last year disclosed that it invested in Bill Me Later. Bill Me Later was going to be acquired by someone and eBay just couldn't afford to allow Amazon to swoop it in. If Amazon took out Bill Me Later, eBay would have to compete with Jeff Bezos & Co. on all fronts. Amazon's third party merchant network and fixed pricing structure is giving eBay fits as it is. While Amazon didn't appear to be a bidder for Bill Me Later today it didn't take a psychic to figure out that the e-commerce giant would have been later.
Also see: eBay has Amazon envy: Cuts fees to get more fixed pricing
EBay said separately that Bill Me Later will generate $150 million in revenue in 2009, but dilute earnings 3 cents a share to 5 cents a share in the fourth quarter. In 2009, the Bill Me Later acquisition will cut eBay's earnings between 6 cents a share to 13 cents a share. Bill Me Later will add earnings in 2011.
However, eBay is looking to future growth with the Bill Me Later purchase.
EBay also noted in a presentation that Bill Me Later's credit model was performing well in a downturn. That's no small issue given the current credit crunch and the fact that Bill Me Later's model depends on assessing consumers' ability to pay the company back. Bill Me Later CEO Gary Marino added that the company does not issue credit lines. It makes its loan decisions case by case and aims to collect interest on reasonable terms--also known as the tried and true banking model.
I'd argue that it's still early in the credit crunch to proclaim Bill Me Later's model as superior. Time will tell.
EBay also confirmed that its third quarter revenue will hit the low end of its outlook due to a stronger dollar and weak economic environment. But the company said it would top its earnings targets. Wall Street is expecting the company to report earnings of 32 cents a share on revenue of $2.16 billion. Excluding options expenses, eBay is expected to report earnings of 41 cents a share, according to Thomson Reuters.
As for the $390 million purchase of dba.dk and vehicles site bilbasen.dk it's more international expansion for eBay.
Why the shuffling at eBay? The online auctioneer is being squeezed by rivals like Amazon and taking a hit from a slowing economy. Another theme: It's unclear whether consumers want to screw around with auctions long term.
As a result, eBay's traditional growth is slipping. The company said it is cutting 10 percent of its workforce along with temp workers and open positions. eBay said it will take charges of $70 million to $80 million in the fourth quarter.
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Talkback
Is it a hard time now?
Courage or Foolishness?
Like you, I am confident in e-commerce. I believe ebay is recession proof. But, I believe their downfall is due, not to a bad economy, but, their stupidity. Their pissing off sellers and buyers at every turn.
Imagine you are a seller, and you read that ebay is lowering prices, only to find out they're actually charging MORE!
Thats what happened with the Jan. 29th announcement. And, again when they offered promotions where they were allowing people to list their vehicles for $1 as opposed to the typical $40. Instead of the typical $50 final fee, ebay more than doubled it to $110! Some "special". Imagine going to a store, and they had a "special" where you could buy a turkey for $1, but by taking advantage of it, they charged you $50! That's essentially what ebay did.
I can go on about how ebay is enabling extortion, by disallowing legitimate negative feedback for buyers, and how all a buyer has to do is claim there was something wrong with the item they received, and ebay/paypal will fully refund the money! No investigation. No seeing if the seller is willing to work through things. Just take the money, and give it back to a buyer, no questions asked.
IF ebay is so concerned about buyer safety, why not do the right thing and ban the bad sellers, rather than play all these games and pretend they are about buyer safety?
I can go on and on about how ebay is destroying families around the world. But, that would take longer than I have. What's going on at ebay is NOT a result of a bad economy. Its a result of greed and pissing off a large number of buyers and sellers.
Tim
http://forums.delphiforums.com/boycottebay/start
http://myspace.com/boycottebay
may be you're right
RE: eBay doubles down on payments as it buys Bill Me Later; Lays off 1,000
RE: eBay doubles down on payments as it buys Bill Me Later; Lays off 1,000
Well, layin off people with experience in the field,
it is not the best idea,it will be to expand the
company and using the experienced people in other
fields in the world wide market.
When you deal with experienced people you can have
peace of mind that they will treat you well.
Example: Shipping companys in all their diferent ways
to bring the items to your home tru ebay etc,,, is
just a small example, go figure the rest.
The sky??s are the limit
sincerely
Jose Iba??ez
Spain
Correct.
How is it a company can piss off a large portion of its clients, and expect to succeed?
Ebay expected to piss everyone off and there be no backlash? OF COURSE there would be. EBay's slowdown is NOT due to the economy. It's due to us leaving ebay and going to sites like onlineauction.com where they provide REAL customer service, by offering phone support, and ioffer.com where sellers and buyers are actually encouraged to negotiate with each other.
I'm primarily a buyer. Back in Feb or March, in an article from Reuters, ebay was quoted as saying "Buyers don't boycott ebay".
WRONG! I'm a buyer, and I am not only boycotting ebay, I'm heading up the boycott efforts!
I just simply refuse to buy from a company that refuses to listen to the clients. A company that would rather spend money attracting companies to give them free listings.
But, does all this surprise anyone? Ebay has zero loyalty to their employees. They have zero loyalty to their clients. Heck, they even sued Craig's List earlier this year, because Craig's List made unilatteral decisions that would wipe them out of their 28% ownership. Imagine that? Ebay suing someone for doing the SAME things they're doing. And people expect ebay to treat their employees right? Not a chance. And, as you very aptly point out, it's not a brilliant idea to let go of experienced employees. But, then again, who said we were talking about brilliant people?
Tim
http://forums.delphiforums.com/boycottebay/start
http://myspace.com/boycottebay
RE: is this part of the plan to go to all electronic payments?
And if eBay is shooting itself in the foot, just how far can they keep that up?
Does eBay realize that it's not auction the people are not willing to wait for it's the fact that yes, Virginia, there really is a downturn in the economy, so we're only going to buy what we need when we need it.I would love a good auction if the poor fellows that are putting the auction on weren't so poor to the point where they can't afford the fees anymore, so why bother selling the good stuff if it's only going to bring a dollar, and eBay is going to take out it's 90 cents with the electronic payments, fees, maximum shipping costs and whatever else they can think of to keep their shareholders happy. (hint, eBay, it really isn't the shareholders that are keeping you in business)
Pretty Much Hit that Nail on the Head
Ebay keeps on shooting itself in the foot, and what drives me so crazy is the BS they spew out and that people actually believe the nonsense!
I'm not sure WHAT ebay is attempting to do. I have a pretty good idea, and this article seems to demonstrate it. It seems to me ebay is going to trash it's stock value, and in a year or so, try to convince everyone that they are this wonderful acquistion. My thoughts are that because ebay was portrayed as having little or no growth potential, they figured the only way to get growth potential is to dilute the stock's value. Then, try and rebound
later. I mean, heck, if your stock is valued at $5 and it jumps to $10 in a relatively short time, that's going to create some type of buzz, and suddenly everyone is thinking they're going to make tons of money. Except, the fact is, ebay is STILL the same company that used to be valued at above $40, and is hovering around $20, and that ebay has literally pissed off a huge percentage of people who actually bring in the money. And, with backroom deals with companies such as Buy.com, as I demonstrate in this video: http://www.youtube.com/watch?v=hKkUCMLZG6E
it seems buyers and sellers like you and I are no longer welcome. Buy has taken up 40% of all listings in books, when that video was made. Now, i'm afraid it is even higher.
I ask all to join the ebay boycott. Put an end to this nonsense that is ebay.
Tim
www.myspace.com/boycottebay
http://forums.delphiforums.com/boycottebay/start
boycotting ebay
there is a company in England called auctionspecialists.com that is generating a little interest. Another one called ahhge.com that looks like people actually are looking at. Trouble is, eBay has given everybody the idea that they're the only one that is legitimate because of the spam that gets through in their name. (figure that one out)
At least this might be two places to start anyway. If there is something out there that's even better I'd like to hear about it.
eBay IS forcing move to electronic payments
RE: Doesn't Matter To Me
RE: eBay doubles down on payments as it buys Bill Me Later; Lays off 1,000
more accurate: ebay becomes a lender and lays off 1,000
is laying off 1000 just to be in sync with the financial industry?...and we thought the only idiots were on Wall Street!....
RE: eBay doubles down on payments as it buys Bill Me Later; Lays off 1,000