EBay to cut 1,000 jobs, spend $1.3B on acquisitions

By Jacqueline Emigh, BetaNews

October 6, 2008, 12:59 PM

Online auctioneer eBay today announced plans to cut 1,000 jobs, while at the same time spending about $1.3 billion on three acquisitions: electronic payments business Bill Me Later and Danish Web sites dba.dk and bilbasen.dk.

Today's job reductions, amounting to 10 percent of eBay's work force, follow an earlier round of cuts amounting to 125 jobs in North America and Europe, including 70 at its headquarters in San Jose, CA.

Bill Me Later -- a company that will now be acquired by eBay for $820 million in cash and $125 million in outstanding options -- will be folded into eBay's PayPal electronic payments division. The service uses "sophisticated underwriting techniques" which allow shoppers to be informed in seconds whether they've been approved for credit, eBay said in a statement.

EBay also plans to purchase Danish classifieds site dba.dk and vehicles site bilbasen.dk for a total of $390 million in cash.

In a conference call, eBay Chief Executive John Donahoe said that the weak economy and the strengthened US dollar are both "affecting our business."

Over the past year, EBay has instituted new policies, such as eliminating the ability of sellers to bully buyers by leaving "negative feedback" about them, in efforts to improve users' buying experiences.

However, many sellers are now up in arms over users who fail to pay after committing to buy.

Although eBay has continued to show big profits over the past year, attempts to attract new users haven't been that successful. Over the company's most recent quarter, the number of users rose only 1.4% to 84.5 million. Still, folks have been using the worldwide auction site to buy everything from a house for $1.85, to Apple iPhones for more than $1,000.

Last week, however, eBay received a lot of publicity when Joanne Smith bought a house in Saginaw, MI for $1.75. A quick search by BetaNews of "residential real estate" today turned up no other homes priced quite that cheaply on eBay, although a house in South Bend, IN, for example, was going for $3,150 with a little over six hours left in the auction.