eBay Shares Beaten Down (Update)

Chief Executive John Donahoe described the economic environment as "very challenging," and expects more of the same for the all-important holiday season.

"Consumers are under significant pressure and seem to have reined in their discretionary spending," added Chief Financial Officer Bob Swan during Wednesday's conference call with analysts.

Both Donahoe and Swan emphasized eBay's efforts to diversify its portfolio of businesses to assure future growth. That includes its recent acquisitions of online payment service Bill Me Later as well as two online classified ad sites in Denmark.

The two executives also discussed the various changes introduced through the course of the year, including fee restructures and a ratings system meant to draw more people to the site.

Donahoe pointed out that buyers are starting to respond, making more purchases from sellers who have high ratings and less from those with low ratings. Nonetheless, the change hasn't translated into more dollars being spent on the site, he said.

Donahoe also addressed the notion that eBay was moving away from its original auction-style format toward fixed prices as a way to better compete with Amazon(AMZN Quote).

"Are we promoting fixed price at the expense of auctions? The answer is no," he said, adding that eBay is simply trying to offer buyers more choice by improving the fixed-price format.

eBay has clearly moved aggressively when it comes to fixed pricing. It recently cut listing fees for its Buy It Now format by 70% and extended the listing periods to 30 days from seven days.