It’s official: Whitman’s out, Donahoe’s in, and eBay’s looking ahead.
With the operator’s introduction of Meg Whitman, president and CEO, and John Donahoe, future president and CEO, eBay’s fourth-quarter earnings call began with a human touch.
Donahoe, 46, will take the helm on March 31, after serving as eBay’s president of marketplaces for almost three years.
“Many of you know I’ve said in the past that 10 years was about the right amount of time for any CEO to stay at the helm of a company,” Whitman wrote in a blog post. “Now that I’ve reached that milestone myself, I still believe this. It’s time for eBay, and this community, to have a new leadership team, a new perspective and a new vision.”
The news of the executive transition was widely expected. Earlier this week, The Wall Street Journal reported that Whitman would make good on her 10-year credo. Whitman joined eBay in March 1998.
Crunching the numbers, eBay reported record fourth-quarter revenue of $2.18 billion – the first period the company had cracked the $2 billion threshold. eBay’s robust growth was driven in large part by PayPal, its payment services arm, which posted 35 percent year-to-year growth with $563 million in sales for the quarter, and $1.9 billion for the year.
In the quarter, eBay pocketed $531 million in profits, or 39 cents a share, up from the $346.5 million, or 25 cents a share, it earned in the year-ago quarter. Excluding one-time items, eBay returned a profit of $611 million, or 45 cents a share, topping analyst estimates of 41 cents a share..
However, eBay’s earnings guidance of $2 billion to $2.1 billion for the first quarter of 2008 fell short of Wall Street projections of $2.14 billion. After jumping 6.7 percent to close at $28.94 on the buzz about the executive transition, eBay’s shares fell $1.44 a share, or 5 percent, to $27.50.
eBay closed the year with $7.67 billion in revenue, up 29 percent from the 2006 mark of $5.97 billion.
Despite the $1.4 billion write-down eBay had swallowed in October to conclude its purchase of VoIP
“It’s important to remember that Skype is an extremely successful four-year-old,” Whitman said. “Skype is exiting 2007 much stronger than it was even in the summer.”
Whitman touted Skype’s instant-messaging partnership with MySpace to provide instant messaging services as a precursor to future business partnerships to grow the business that many have disparaged as an anchor on eBay’s growth.
“Skype is still a young company on a great trajectory that is revolutionizing communications on the Net,” Donahoe added.
Skype posted fourth-quarter sales of $115 million, up 76 percent from the same period a year ago. eBay reported 276 million Skype subscribers at the end of 2007.
Donahoe thanked Whitman for her service and transformative role in eBay’s growth, and outlined some points of development to expect from the company under his tenure.
Donahoe said that he would move aggressively to make eBay easier to use and safer for consumers. He said eBay had been scrutinizing the buying and selling experience, and improvements to the speed, reliability and convenience of the transaction process could be expected in the coming weeks.
eBay will also be taking a closer look at its fixed-price sales, looking to blend the fun and selection of the auction model with the reliability of fixed-price selling, Donahoe said. “The growth of our fixed-price business is outstripping the growth of e-commerce as a whole,” Donahoe said, announcing that auctions and fixed-priced selling would be blended in a “uniquely e-Bay way.”
Led by PayPal, the growth of eBay’s merchant services outpaced its core business units in 2007, and Donahoe expects an even brighter future, declaring that “2008 will be PayPal’s best year yet.”
eBay will also make an announcement lowering listing fees in the United States, Germany and the U.K. in the next week. It will also look to broaden its revenue base by seeking advertising opportunities for PayPal, StubHub and other business units.
As for the executives, Whitman will continue to serve on the company’s board of directors but did not say what her next endeavor would be outside the company. Whitman is a longtime friend of former Massachusetts Governor and Republican presidential candidate Mitt Romney, and it has been rumored that she would be on the short list for a cabinet position should Romney win the election.
The company also announced that PayPal President Rajiv Dutta will become executive vice president of eBay and assume Donahoe’s role as president of marketplaces. Dutta was also elected to eBay’s board of directors.
Scott Thompson, currently serving as PayPal’s chief technology officer, will become PayPal’s president.
Bill Cobb is stepping down as president of eBay North America and will retire from the company at the end of the year.
Lorrie Norrington, the current president of eBay International, will assume Cobb’s responsibilities and move into the position of president of eBay marketplaces operations, reporting to Dutta.
