Auction powerhouse Ebay has announced that it would send pink slips to around 10 percent of its global workforce - its biggest layoff drive - roughly around 1000 full time employees, as well as hundreds of temporary workers whose contracts won't be renewed.
The move, Ebay said, was unrelated to the current slowing global economy and marks the online mammoth's pledge to improve its core business whose rate of growth has been slowing down significantly over the past few years. The restructuring will cost Ebay up to USD 80 million but will result in annual savings of USD 150 million according to the company's bean counters.
Ebay also announced that it will spend USD 1.3 billion to buy three companies - Bill me later, Den Bla Avis and BilBlasen in a bid to improve its flagging business. Like Paypal, Bill me later is seen by Ebay as a potential competitor to its core business and combining it with Paypal - which it bought in 2002 - makes sense.
Paying USD 830 million for it though may not be the wisest move around, especially during the current cash crunch situation, especially when taking into consideration the USD 125 million outstanding options that could add up.
The auction site is expected to bring in around USD 2.1 billion this quarter and strongly believes that it is in a position to hit 39 to 41 cents. Ebay shares, at the time of writing, took a serious battering, plunging below USD 17, a fall of 40 percent over the last six months and half its share prices from one year ago.
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