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EBay to cut 1,600 jobs, 10 percent of work force

06.10.2008 20:05 Shopping - Source: toledoblade.com

NEW YORK — EBay Inc., which still reaps big profits but has been struggling to attract new users, said Monday it will cut its work force by 10 percent — about 1,600 jobs — in an attempt to streamline its business.

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 leaving open positions unfilled. It is eBay's largest round of dismissals ever.

EBay Chief Executive John Donahoe said the company is "creating efficiency" in areas that require it. EBay would not describe which positions would be cut, other than to say they will come across the company and around the world.

The Internet auction company expects restructuring charges of about $70 million to $80 million as a result of the cuts, mostly in the fourth quarter. EBay said the reductions will lead to $150 million in annual cost savings.

The latest round of cuts follows eBay's announcement earlier this year that it was cutting 125 jobs in Europe and North America, including 70 posts at its headquarters in San Jose, California.

Donahoe said Monday the weak economy and the effects of the strengthening dollar are "affecting our businesses." Nonetheless, eBay said its third-quarter earnings would be higher than it predicted in July — though revenue will be at the low end of its expectation. The company is scheduled to report third-quarter results on Oct. 15.

EBay shares were down $1.29, 6.8 percent, at $17.65 in midday trading.

EBay also said Monday it will buy an online payments business, Bill Me Later, for $820 million in cash and $125 million in outstanding options. The company also said it will buy Danish classifieds site dba.dk and vehicles site bilbasen.dk for $390 million in cash.

Bill Me Later allows online retailers to offer shoppers credit. EBay said Bill Me Later has "sophisticated underwriting techniques" and tells shoppers within seconds if they're approved for credit, without detailed application forms. Bill Me Later will become part of PayPal, the online payment service eBay bought in 2002.

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EBay to cut 1,600 jobs, 10 percent of work force

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