eBay on Monday confirmed rumors that it would lay off about 10 percent of its 15,000 person work force, a move that came after the online auctioneer announced plans to acquire web payment startup Bill Me Later and two Danish classified ads companies for $1.35 billion.
The San Jose, California, online auction giant said the layoffs would affect about 1,000 full-time employees and several hundred temporary workers around the world.
“While never an easy decision to make, these reductions will help improve our operations and strengthen our ability to continue investing in growth,” eBay CEO John Donahoe said in a statement.
The cuts are intended to save the company $150 million annually.
eBay agreed to pay $820 million in cash and $125 million in stock to acquire PayPal rival Bill Me Later for $945 million. The deal is expected to be completed by the end of the year.
Founded in 2000, Timonium, Maryland-based Bill Me Later in December struck a deal with Amazon to offer the service as a payment option. The move fueled speculations that the online retail giant would try to acquire the startup.
Now industry watchers wonder whether the online merchant will ditch the Bill Me Later service from its web site, to the disappointment of Amazon buyers used to the check-out option that puts off paying.
Since the deal with Bill Me Later, Amazon customers could purchase items without submitting their credit card information. The only info required was people's date of birth and last four digits of their Social Security number, along with an address. And within 30 days a bill would arrive by mail, with enticing options such as “no payments for six months” or “no-interest financing.”
The new approach to online payments likely worried eBay as a threat to its PayPal payment system, the leading online payment company. eBay in 2002 acquired PayPal, whose revenue is expected to grow 35 percent this year after it cut a deal with Wal-Mart.
eBay is "making aggressive moves to strengthen our leadership positions in e-commerce and payments to competitively position our company for long-term growth,” said Mr. Donohue, who expects Bill Me Later to generate around $150 million in revenue in 2009.
eBay's bid to buy the Danish classified ads web sites falls into its strategy of dominating the world’s classifieds market. The online auction company has classified sites in 1,000 cities across 20 countries.
The online auction giant also owns a 25 percent stake in Craigslist, the U.S. online classifieds leader, which refused eBay’s acquisition offer earlier this year.