SAN FRANCISCO -- eBay's(EBAY Quote - Cramer on EBAY - Stock Picks) moves to strengthen its business come at a difficult time as investors continue to sour on the stock amid an economic downturn.
Shares fell $1.07, or 5.7%, to $17.87, even after the online auction giant
announced a 10% reduction of its workforce, slashing about 1,000 jobs.
CEO John Donahoe acknowledged that eBay is feeling the impact of a worsening economic environment, as well as a strong dollar that is hurting foreign currency exchange for its businesses overseas.
Nonetheless, he spent most of a Monday conference call touting eBay's latest acquisitions -- also announced on Monday -- as a way to build the company and improve its long-term prospects.
eBay agreed to purchase Bill Me Later, an online payment service, for $820 million in cash and $125 million in outstanding options. It also acquired Denmark's online classifieds site, dba.dk, and vehicles site, bilbasen.dk for $390 million in cash.
Donahoe described the purchases in Denmark as "a strategic and effective use of our cash outside of the United States," noting that eBay made its foray into online classifieds only four years ago and that it has grown into a $250 million business, with margins of over 30% and a growth rate of over 60%.
Bill Me Later, however, may prove to be a trickier venture. Although it provides eBay customers with another online payment option besides PayPal, it also raises questions about whether the company should be assuming new credit risks at such a volatile time in the economy.
Pia Sarkar
RSS
