Global auction giant eBay has announced it will cut about 1600 jobs or 10% of its workforce, but has denied the cuts are due to the growing global economic crisis.
Chief executive John Donahoe said the company has been planning the cuts for some months and says they will make the business “more responsive and nimble”.
"This is trying to position our company in the right way for the medium to longer term. I would say it is not a reaction to the short-term macro environment, or short-term pressures," Donahoe told reporters overnight.
eBay anticipates $US70 million to $US80 million in restructuring charges, but believes the cuts will result in $US150 million in annual cost savings.
The cuts coincided with the announcement of $US1.3 billion of acquisitions by the online auction giant.
eBay has acquired US company Bill Me Later – which lets US shoppers make purchases online or by phone without the need for a credit card – for about $US945 million and purchased Danish online classifieds businesses Den Bla Avis and BilBasen for $US390 million.
Avivah Litan, an analyst at IT research firm Gartner, told the Financial Times that the Bill Me Later purchase will help bolster eBay’s PayPal division, which has unsuccessfully attempted to establish a similar business in the past.
The news of the acquisitions and job cuts was not received well by investors, who sent eBay’s shares down to a six-year low of $16.70 during another horror night on Wall Street.
The sell-off probably had a lot to do with the wider economic slowdown, which Donahue admits is being felt in several of the company’s divisions.
“There is no doubt consumer spending has tightened," he says. “We see that both on eBay and PayPal and as well the strength of the dollar is influencing cross-border trade.”
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