EBay's new chief to use lower fees to speed growth

EBay Inc, the world's largest Internet auctioneer, will cut fees on diamond bracelets and Batman movie posters as incoming Chief Executive Officer John Donahoe tries to boost slowing sales growth.

The online retailer, which forecast 2008 revenue that trailed analysts' estimates, said that Donahoe will take over for Meg Whitman as CEO on March 31.

Donahoe inherits a company facing what may be its smallest revenue gains since going public a decade ago.

Sales in the United States are growing at half the pace overseas, and cash-strapped US consumers are limiting spending in the face of the worst housing market in 26 years.

Investors have slashed EBay's stock market value in half since the end of 2004.

"They've got a new CEO and are making the changes that everyone knows they've got to make," said Tim Boyd, an analyst at American Technology Research in Greenwich, Connecticut, who recommends investors buy the shares.

The company "was in denial about the changes that are needed because they didn't want to spook investors".

EBay fell $1.44, or 5 percent, to $27.50 on Wednesday in trading after the NASDAQ Stock Market closed. The stock dropped 13 percent this year before yesterday.

"It's tough to stay fresh after 10 years, no matter who you are," Whitman told analysts on a call on Wednesday. She cited technological changes and new competitors as reasons EBay needs "new perspective, new eyes".

Quarterly results

The company projected full-year profit of $1.63 to $1.67 a share, compared with the average estimate of $1.67 in a Bloomberg survey. Sales in 2008 will be from $8.5 billion to $8.75 billion, less than the $9.04 billion estimated by analysts.

The company has a "lot more work to do" to spur auction sales, Whitman said.

EBay will announce next week a plan to lower fees sellers pay up front, with a goal of attracting more listings.

At the same time, the company won't eliminate the so-called insertion fees to guard against sellers flooding the auctions with items that won't sell, executives told analysts on a conference call.

In addition, EBay will weed out fixed-priced merchandise that's "not well priced" by providing it "less and less exposure", Donahoe said.

Net income in the quarter through December advanced to $530.9 million, or 39 cents a share, from $346.5 million, or 25 cents, a year earlier, spurred by international growth.

Revenue climbed 27 percent to $2.18 billion, San Jose, California-based EBay said.

Excluding some items, EBay earned 45 cents a share in the fourth quarter, better than the 41 cents estimated by analysts. They projected revenue of $2.14 billion.

Agencies

(China Daily 01/25/2008 page17)