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San Francisco: Online retailer eBay Inc, trying to reverse years of slowing growth in its auctions business amid rising competition and a spreading financial crisis, said that it would cut 10 per cent of its global work force even as it spends $1.3 billion to buy three web businesses.
Even after the largest reduction in its 13-year history, which eBay said would save $150 million in annual operating costs, the San Jose company saw its shares tumble by as much as 12 per cent to their lowest level in more than five years. They recovered to close at $17.89, down 5.5 per cent on Thursday.
Investors are concerned that eBay's bread and butter, online auctions, is showing increasing vulnerability to slowing consumer spending, the slumping US house market and high fuel prices.
eBay's latest slide was part of a broad sell-off of technology stocks. Anal-ysts say the high-tech industry is firmly in the grip of the economic turmoil it had hoped to sidestep. Companies such as Micro-soft, Google and Yahoo are re-evaluating their staffing levels, and giants such as Hewlett-Packard have already cut jobs.
Although eBay said the layoffs were not a result of the economic downturn, chief executive John Donahoe acknowledged that the weakening economy and the strengthening dollar were affecting sales. Donahoe, who took the reins from Meg Whitman in March, has been trying to lead a corporate overhaul.
"People are still looking for that turnaround and for growth in the core operations," Standard & Poor's analyst Scott Kessler said.
Part of eBay's turnaround strategy is to jump-start growth by investing in its web payments and classified advertising businesses. eBay also plans to lay off about 1,000 full-time employees and as many as 600 temporary workers, and to take a restructuring charge of as $80 million in the fourth quarter.
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