The New York Times-20080124-EBay-s New Leader Moves Swiftly on a Revamping

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EBay's New Leader Moves Swiftly on a Revamping

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John Donahoe wasted little time as the new chief executive of Internet giant eBay before announcing big changes.

Less than an hour after being named to the top spot at eBay by the departing chief executive Meg Whitman, Mr. Donahoe said in a conference call with analysts that the company must move more quickly and aggressively to make eBay more appealing to buyers and sellers.

In an effort to reinvigorate growth of the core eBay site, Mr. Donahoe said he would shift eBay's emphasis from auctions to fixed priced listing, which could make the experience of buying on eBay more like the one customers have come to expect from sites like Amazon.com.

He has been president of eBay's marketplaces division for the last three years after Ms. Whitman recruited him from Bain & Company, the consulting firm. He assumes the new job on March 31.

Auctions will always be the core of the core of eBay, it's what makes eBay unique, Mr. Donahoe said in a joint interview with Ms. Whitman on Wednesday afternoon. But he noted that fixed priced sales now account for 40 percent of eBay's marketplace revenue. We are following our users. They like convenience so what we are simply doing is putting a more explicit focus on that.

Mr. Donahoe also said the company would announce a new fee structure next week, lowering upfront listing fees and raising the final sale fees that sellers pay only when they have successfully sold an item. Such a move could increase the number of listings on the site but it could also depress revenue in the short term.

In anticipation of the changes, eBay issued lower earnings guidance for the quarter and year ahead than Wall Street had been expecting. The company said revenue in the current quarter would grow as much as 15.8 percent from the same quarter last year and projected revenue for all of 2008 could be as high as $8.75 billion, a 13.6 percent jump. But analysts were expecting a 21.5 percent increase for the quarter and a 17.1 percent increase for the year.

EBay's shares fell about 5 percent in extended trading after gaining 6.7 percent in the regular session to close at $28.94, a gain of $1.81.

News of slower growth detracted from a generally rosy earnings report. For the fourth quarter of 2007, eBay reported net income of $611 million, or 45 cents a share, up 42 percent from a year earlier. Revenue was $2.18 billion, up 27 percent from the same period last year and ahead of Wall Street's forecast of $2.14 billion.

Ms. Whitman, 51. one of the most prominent female chief executives in the business world, will have served as chief executive for 10 years, having been hired before the company went public. In many ways it is bittersweet, Ms. Whitman said. I have loved this company and could not be prouder of the work of our employees and community. I will miss it.

She said she does not envision becoming chief executive of another company. I think this is my last business job, and I have loved it and can't imagine a more fun company than eBay, she said.

She said she will continue to campaign for her friend and former colleague at Bain, Mitt Romney, the Republican presidential candidate, but will generally be powering down from a grueling work schedule. She will remain on eBay's board.

Ms. Whitman said she did not think she was leaving at a time of greater-than-usual turmoil at the company. She said the company had always faced challenges-- such as when it struggled after the dot-com bubble burst in 2000, when rivals like Amazon and Yahoo entered the auctions business and when its international expansion faltered earlier in the decade.

Mr. Donahoe will be facing some formidable challenges in his new role. EBay is losing market share to rivals, has failed to attract new users and has struggled to combat widespread fraud and counterfeit items for sale on the site.

One critical measure of his success will be how the typically vocal and sometimes irascible members of the eBay community handle the coming changes. EBay observers said the community is likely, at least, to embrace new leadership.

If you look at Meg Whitman's tenure through the appropriate lens, it was an incredible success, said Scott Devitt, a managing director at Stifel, Nicolaus & Company. But as the business matured, there have been significant requests for change on the site and the constituents have not been satisfied. Getting a fresh face and a different perspective will be viewed positively I think.

[Illustration]PHOTO: EBay's incoming chief executive, John Donahoe, and Meg Whitman at a conference in Sun Valley, Idaho, last July. (PHOTOGRAPH BY RICK WILKING/REUTERS)