EBay Inc., which is the biggest online auction site, is still making lots of money. However, the company has been struggling to attract new users. Moreover, EBay will also cut about 1,000 jobs in an effort to reshape its business. The cuts amount to 10% of eBay's work force.
EBay has planned to get rid of hundreds of impermanent workers, and reduce open positions. EBay will make a "creating efficiency" campaign in areas that require it. EBay expects restructuring charges of about $70 million to $80 million because of the cuts, mostly in the fourth quarter. EBay said the actions would lead to $150 million in annual cost savings.
Meanwhile, the latest round of cuts follows eBay's announcement earlier this year that it was cutting 125 jobs in North America and Europe, including 70 posts at its headquarters in San Jose, Calif.
It seems that the economic crisis and the effects of the strengthening dollar are affecting EBay's businesses. Nonetheless, eBay said its third-quarter earnings would be higher than it predicted in July, though profit will be at the low end of its expectation. The company is scheduled to report third-quarter results on Oct. 15. In addition, EBay shares were down $1.19, 6.3%, at $17.75 in morning trading.
Recently, EBay also planned to acquire Bill Me Later for $820 million in cash and $125 million in outstanding options. Moreover, the company also will acquire Danish classifieds site dba.dk and vehicles site bilbasen.dk for $390 million in cash.
Bill Me Later is an online payments business company, which allows online retailers to offer shoppers credit. According to EBay, Bill Me Later has "sophisticated underwriting techniques" and tells shoppers within seconds if they are approved for credit, without detailed application forms. Bill Me Later will become part of PayPal, the online payment service EBay acquired in 2002.
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