eBay to Cut 10 Percent of Workforce

By Reuters  |  Posted 10-06-2008 Print Email
eBay plans to make more than $1 billion in acquisitions to try to ward off effects of the sagging U.S. economy.

EBay plans to cut its work force 10 percent and sees third-quarter revenue hitting the low end of its forecast, though profit will exceed expectations, the online auction Web site said on Monday.

EBay also said it would spend more than $1.3 billion to buy companies that bolster its online payments and classifieds businesses as it seeks to improve its performance in a weak U.S. economy.

Its shares fell 2.6 percent in premarket trading after rising as much as 2 percent immediately after the announcement.

EBay, which has faced slower growth in its core auction business over the last few years, said it will buy the Bill Me Later payments service for about $820 million in cash and $125 million in options. The business offers consumers deferred payments and financing promotions.

It will be combined with eBay's PayPal unit and is expected to generate $150 million in revenue in 2009. EBay sees the deal closing in the fourth quarter and adding to earnings in 2011.

EBay is also buying Danish online classifieds businesses Den Bla Avis and BilBasen for about $390 million.

EBay said the job cuts would affect about 1,000 employees and several hundred temporary workers. The reduction is expected to incur restructuring charges of about $70 million to $80 million, mostly in the fourth quarter.

For the third quarter, eBay expects to hit the low end of its revenue forecast of $2.1 billion to $2.15 billion and exceed the high end of its earnings forecast range of 39 cents to 41 cents per share, before items.

The San Jose, California-based company is scheduled to announce third-quarter results on October 15.

EBay shares fell to $18.45 in premarket trading from a close of $18.94 on Friday.

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