WASHINGTON (AFP) — Internet giant eBay Inc., which has seen sluggish growth in its online auction business, announced Monday it was cutting its global workforce by about 10 percent.
In a statement released by its San Jose, California headquarters, eBay said it was cutting 1,000 permanent employees and several hundred temporary workers in a bid to streamline its organization.
Separately, it announced it was purchasing online payment service Bill Me Later -- a rival to its market-leading PayPal -- for 820 million dollars (606 million euros) in cash and 125 million dollars in employee options.
The global workforce reduction is intended to simplify and streamline eBay's organization, improve its cost structure and strengthen the overall competitiveness of existing businesses, it said.
"While never an easy decision to make, these reductions will help improve our operations and strengthen our ability to continue investing in growth," said John Donahoe, eBay's chief executive.
The job cuts are expected to result in pre-tax restructuring charges of about 70 million to 80 million dollars, with the charges predominantly recorded in the fourth quarter of 2008, eBay said.
It said it expected to hit the low end of its third quarter revenue guidance -- between 2.1 billion and 2.15 billion dollars -- when results for the three-month period are released on October 15.
On the Bill Me Later acquisition, Donahoe said eBay is "making aggressive moves to strengthen our leadership positions in e-commerce and payments to competitively position our company for long-term growth".
Bill Me Later, founded in 2000, is the number-two online payments company after PayPal. eBay said it expects Bill Me Later to generate around 150 million dollars in revenue in 2009.
The purchase of the Danish websites is part of eBay's bid to strengthen its global position in the classifieds market. It now has classified sites in 1,000 cities in 20 countries.
"Classifieds are the preferred e-commerce format in Denmark and represent an attractive and growing market," said Jacob Aqraou, general manager, eBay global classifieds business unit.
"With more than 25 years of classifieds success in Denmark, Den Bla Avis and BilBasen are household names with Danish consumers."
Growth has been strong in online classified ads worldwide, and eBay's global classifieds business experienced revenue growth of 65 percent in the second quarter over the same period last year.
But its core online auction business has experienced poor growth recently amid increaseed competition from sites such as Internet retail giant Amazon.
"They've been losing customers for awhile." said analyst Rob Enderle of Silicon Valley's Enderle Group. "They've been losing sellers and people are not buying in the current economic climate."
Enderle said that with the Bill Me Later purchase, eBay is "investing in a technology that should help offset some of the losses."
"They're focused on increasing revenues," he said.
The moves failed to impress Wall Street and eBay, which is listed on the Nasdaq, lost 5.54 percent on Monday to close at 17.89 dollars.
Besides its online auction side and PayPal, eBay Inc. also owns voice and online text message service Skype, ticket service StubHub and Shopping.com.
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