Uncertainty Unravels eBay

Shares fall as a new business model and a CEO shuffling spooks investors.
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Everything's up in the air at


(EBAY) - Get Report

, and the stock is down sharply as a result.

Shares of the Internet auction giant were off more than 7% to $26.84 on Thursday after the company announced a first-quarter forecast on Wednesday that

missed Wall Street estimates and said its longtime CEO had less than two months left on the job.

eBay also announced that it would take dramatic steps to accelerate growth in its sagging auction business, which accounts for 70% of the company's revenue.

eBay plans to unveil a new pricing plan with the hope of sparking more growth in its marketplaces unit. During the fourth quarter, revenue growth in the division slowed to 21% from 26% during the prior quarter.

eBay will give the details of the new pricing plan next week. But the company is expected to reduce the upfront fee it charges sellers to list items and instead bank more heavily on collecting a fee only when an item is sold. The move is intended to spur sellers to put more items for sale on eBay.

The company also will move more items from an auction format to a fixed price format, said John Donahoe, who will succeed Meg Whitman as CEO at the end of March. While eBay's auction format makes it distinct among e-commerce players, users also value the convenience of the fixed-price format, he said.

Still, "auctions will always be at the core of eBay," Donahoe said. "We want to offer users value, selection and fun. Ultimately, we will follow what the buyers and sellers want closely."

But the boldness of the moves was met with skepticism from some analysts, who say all bets are off now that eBay is essentially reinventing its business model.

"This initiative clearly heightens the risk profile for eBay, should the company move to a performance-based orientation," Deutsche Bank analyst Jeetil Patel wrote in a note to clients on Wednesday. "Suffice it to say, beyond February, all models and assumptions surrounding eBay will likely become null and void due to the upcoming changes."

Deutsche Bank makes a market in eBay shares.

Patel forecasts that eBay may reduce listings fees by as much as 75%.

But even the dramatic changes announced Wednesday to eBay's business plan may have been overshadowed by the news of Whitman's exit. Her departure had been a topic of speculation for several quarters; Whitman has been at eBay for a decade and had previously said that a CEO should typically move on after that period of time.

But despite her official departure in March, Whitman will remain on the board at eBay and plans on spending a considerable amount of time working with the company in the year ahead, she said in an interview.

She will also remain on the boards of conglomerate

Proctor & Gamble

(PG) - Get Report




. Whitman also plans on helping out in the campaign of longtime friend and presidential candidate Mitt Romney, and working on her family foundation.

She doesn't, however, expect to take any future jobs in business. "It's hard to think of a job that will be more fun than eBay has been," she said.