Pay Me Now, Bill Me Later: eBay Slashes One Thousand Workers, Buys Companies

The company is handing out pink slips to 1,000 full time employees, plus temps, contractors, and will take a restructuring charge of $70 to $80 million predominantly in the fourth quarter, eBay said in an analyst call. eBay president and CEO John Donahoe said that the company is simplifying the organization and aligning its cost structure to compete in a "challenging environment."

"While never an easy decision to make, these reductions will help improve our operations and strengthen our ability to continue investing in growth," said Donahoe.

Those investments include the company's acquisition of online payments business Bill Me Later for approximately $820 million in cash and roughly $125 million in outstanding options. The deal is expected to be completed at the end of the year.

In an analyst conference, eBay that the acquisition will lower PayPal's transaction expense and monetizes consumers, and is expected to offer synergies of worth $700 million to $1 billion.

eBay said that Bill Me Later offers deferred payments and promotional financing service to millions of customers who use eBay and PayPal. The deal also helps PayPal expand its customer base to approximately 1,000 popular Web sites and to millions of online shoppers who use Bill Me Later. Additionally, eBay said that the Bill Me Later credit model continues to perform well in the downturn.

"We are making aggressive moves to strengthen our leadership positions in e-commerce and payments to competitively position our company for long-term growth," said Donahoe."

eBay also acquired Denmark-based Den Bla Avis and BilBasen, online classifieds site providers for approximately $390 million.

The addition boosts eBay's global classifieds portfolio, adding to Kijiji, an eBay classified ad site launched last year that has been compared to Craigslist.com. eBay also owns online classified ad sites Marktplaats, LoQUo, Gumtree and mobile.de. eBay's online classifieds business now has a presence in more than 20 countries and 1,000 cities.

Den Bla Avis and BilBasen operate dba.dk, an online classifieds site that generates more than 120 million page views per month, and bilbasen.dk, an online car classifieds site that generates 66 million page views per month. The sites will maintain offices in Aarhus and Copenhagen, Denmark.

eBay also said Monday that it will meet third quarter revenue guidance at the low end, between $2.115 to $2.120 million when it reports results on October15.