eBay spends $1.3 billion on acquisitions but cuts 1000 jobs

07 October 2008

Global internet auction company, eBay, hasd announced that it would cut 1,000 jobs, as it plans to save $150 million a year due to declinming sales, even as it spent about $1.3 billion on three acquisitions - electronic payments business 'Bill Me Later', Danish web sites 'dba.dk' and 'bilbasen.dk'.

The job cuts amount to 10 per cent of eBay's work force and comes after an earlier round of 125 layoffs in North America and Europe, including 70 at its headquarters in San Jose, California.

The cutback would also affect "several hundred temporary workers and the reduction of open positions," eBay said in a statement. The layoff would result in a reorganisation charge of $70 million to $80 million, which will be accounted for in its fourth quarter.

CEO, Donahoe said, laying off employees was "never an easy decision to make," and added, "These reductions will help improve our operations and strengthen our ability to continue investing in growth."

eBay's acquisitions of 'Bill Me Later' come for $820 million in cash and $125 million in outstanding options and 'Dba.dk' along with 'bilbasen.dk' would cost the company $390 million in cash.

The company said that Bill Me Later will be merged 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 or not.