Even as many of the other hot Internet companies were faltering in recent years, eBay remained a Wall Street darling. It made two big acquisitions — PayPal and the Internet phone service Skype — and continued to post heady sales and earnings growth as it expanded overseas.
But after a trying week in which one of the company's top executives resigned, eBay is facing new concerns over executive turnover and management succession, adding to what may be an even bigger challenge: an invasion of its turf by Google.
Last week, eBay, the world's biggest online marketplace, announced that Jeff Jordan, 47, who was seen as a likely successor to Meg Whitman, 49, the chief executive, planned to leave later this year. The departure of Mr. Jordan, president of eBay's PayPal unit, is the latest in a string of departures among high-level executives.
The news sent eBay's shares into a downward spiral, and on Friday, the share price closed at $26.62, the lowest the stock has been since late 2003 and down almost 45 percent from its high within the last year. Bearish analysts say the departure of Mr. Jordan and others reflects larger challenges the company faces as its core auction business matures, as it struggles in Asian markets and especially as Google begins to entice small merchants away from eBay.
In a joint telephone interview with Ms. Whitman, Mr. Jordan said he had been talking with Ms. Whitman for "a while" about retiring and spending more time with his family.
"I'm in the office by 5 a.m. and I get home at 7," he said, adding "I started talking to Meg about lifestyle issues and concerns. So this is the fulfillment of that plan." Mr. Jordan has 11-year-old twins. In the same interview, Ms. Whitman said, "Obviously I was really disappointed, because Jeff has made a huge difference to eBay," she said, adding "He's got two relatively young children." Ms. Whitman added that "I have two children in college. It goes really fast."
Mr. Jordan said he remained "wildly optimistic" about PayPal's future, pointing out that last year, PayPal accounted for 10 percent of all e-commerce payments in the United States.
In the first quarter of 2006, PayPal transferred nearly $9 billion in payments, a 41 percent increase over the previous year. In 2005, PayPal's revenue exceeded $1 billion, just under a quarter of the company's overall revenue of $4.552 billion.
Mr. Jordan, who has served in several roles at the company since he arrived in 1999, took over at PayPal in December 2004. Last year, Ms. Whitman hired John J. Donahoe, a former managing director at Bain & Company, a management consulting firm where Ms. Whitman has also worked.
One executive who recently left the company said he believed that Mr. Donahoe, who is currently president of eBay's marketplace unit, might have supplanted Mr. Jordan as the leading contender for the chief executive job, and for that reason Mr. Jordan chose to leave.
Ms. Whitman, however, would not discuss succession plans. "I'm here for the long term," she said, and added that "there has been a lot of speculation, but the answer is, I'm here for the long term."
Nor, said Ms. Whitman, was she especially concerned about the drop in eBay's share price. "I've said for many years that we manage a company, not a stock," she said. "We control what we can control." She added that the company's job was to deliver results and "the stock price will take care of itself."
Tim Boyd, a research analyst with Caris & Company, called Mr. Jordan "a great asset" for eBay. "Certainly there's no question it's a loss. He's probably the most important long-term veteran they've lost."
Several observers, including Mr. Boyd, who is recommending eBay stock, said they thought Wall Street overreacted to Mr. Jordan's departure. Mr. Boyd points out that eBay's revenue continues to grow — 40 percent last year, after a 51 percent increase the previous year — its operating margin remains a healthy 36 percent and it still dominates the European e-commerce market.
The announcement of Mr. Jordan's departure came two months after the company said that Maynard Webb, the chief operating officer, would retire in August. Others who have left eBay recently include Lynn Reedy and Michael Dearing, both senior vice presidents.
Mr. Jordan will be succeeded by Rajiv Dutta, who has been serving as president of Skype, the Internet phone service that eBay acquired last year for $2.6 billion. Alex Kazim, vice president of products for Skype, will become its president.
The longer-term issue facing eBay is the challenge of Google, which is luring the kind of sellers who helped build eBay into a powerhouse and which recently unveiled an online payment service called Google Checkout, a rival to PayPal.
"Many of eBay's challenges correlate closely with Google's rise to prominence over the past three to four years," said Derek Brown, an analyst with Pacific Growth Equities who has had a sell recommendation on the stock since 2003. "It's a matter that is likely to become increasingly prominent as Google encroaches more directly on eBay's business." (Mr. Brown said he owned shares in Google.)
One trend that analysts are reporting is sellers leaving eBay and setting up their own Web-based stores, using keywords they buy from Google to drive traffic to their sites. "I think the rate of decline of the popularity of eBay's auction model has accelerated," said Safa Rashtchy, an analyst with Piper Jaffray & Company. "You add to that a behemoth like Google and the trend is unstoppable."
The announcement of Mr. Jordan's departure came shortly after Google introduced Google Checkout, a simple way to store credit card information with participating merchants.
"Google really thought about this one," said Mr. Rashtchy, who has a hold rating on eBay stock. Mr. Rashtchy said he was particularly impressed by the ease of using the new Google feature.
Last week eBay added Google Checkout to a list of payment services its sellers cannot use, which will continue "for the foreseeable future," said Hani Durzy, a spokesman for eBay, based in San Jose, Calif. Mr. Boyd of Caris pointed out that Google was offering discounts to sellers who sign up for Checkout. "They're basically subsidizing advertisers to adopt Google Checkout," he said.
Ms. Whitman said the timing of the announcement of Mr. Jordan's departure was "completely coincidental" with Google Checkout, adding that several other management changes had to be decided before the announcement. Ms. Whitman said that a move like this required coordination of many moving parts.
source : http://www.nytimes.com/2006/07/10/technology/10ebay.html?pagewanted=1&ei=5099&en=58daf0a7dc2b6697&ex=1153108800&partner=TOPIXNEWS
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