eBay cuts jobs, buys credit firm

Credit? What could possibly go wrong?


eBay is laying off 1,000 staff and getting rid of hundreds of temporary positions at the same time as it buys three companies.

The job cuts will come at eBay offices around the world, and will cost the firm between $70m and $80m.

John Donahoe, the online tat house's chief executive, said of the redundancies: “While never an easy decision to make, these reductions will help improve our operations and strengthen our ability to continue investing in growth.”

In other news, eBay has paid $945m for an online credit firm called Bill Me Later - $820m of this is in cash and $125m in outstanding options. eBay is also buying two Danish classified firms - dba.dk and bilbasen.dk for $390m in cash.

eBay said Bill Me Later was a natural partner to PayPal. The company provides instant credit to consumers shopping online. When you get to the checkout of one of the 1,000 online shops which accept it, you can enter your birthday and the last four digits of your social security number instead of paying by credit card. It uses its "sophisticated underwriting techniques and credit decision model" to approve shoppers in seconds.

Bill Me Later will then send you a monthly bill which you can pay by cheque. It aims to attract the large number of shoppers who are nervous of using their credit cards online. Investors in Bill Me Later include Citgroup, Amazon and Equifax.

eBay expects the deal to bring in $150m in revenues in 2009 but to dilute GAAP earnings by $0.13 per share for the year. eBay predicts it should add to earnings by 2011.

The Danish classified sites are added to eBay's stable of similar websites including Kijiji and Gumtree. The firm claims an online classified presence in 20 countries.

eBay's SEC filings are available from here.

eBay said it expects to hit the bottom end of targets for sales for the third quarter - full results will be announced 15 October. ®

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