Whitman steps down from eBay

MEG Whitman, one of the original commercial warriors of the online world and a genuine industry legend, is to step down as president and chief executive of auction house eBay at the end of March.

She will be replaced by John Donahoe, currently president of eBay Marketplaces, which accounts for more than 70 per cent of the company’s global revenues.

When Ms Whitman joined eBay in March 1998, the company was a US-only online auction house with just 30 employees and 500,000 registered users – and revenue of $4.7 million. Today, the company has hundreds of millions of users worldwide, more than 15,000 employees and nearly US$7.7 billion in revenue.

“With humor, smarts and unflappable determination, Meg took a small, barely known online auction site and helped it become an integral part of our lives,” eBay founder and chairman Pierre Omidyar said.

In addition, eBay announced that Rajiv Dutta, currently the President of PayPal, has been named Executive Vice President of eBay and will also replace Mr Donahoe as President of eBay Marketplaces. Mr Dutta has also been elected to the eBay board.

Dutta is a 10-year eBay veteran who has previously served as the company’s chief financial officer, and president of Skype, eBay’s communications business. Since July 2006, Mr Dutta has successfully led PayPal to achieve more than US$65 billion in payment volume and three consecutive quarters of accelerating revenue growth.

Scott Thompson, PayPal’s current chief technology officer, will replace Mr Dutta as president of PayPal.

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eBay cuts strike price for Skype deal

ONLINE auction site eBay has cut as much as A$1.36 billion off the potential A$4.9 billion it agreed to pay for VoIP phenomenon Skype when it acquired the company in 2005 because of under performance of the unit.

The write-down in the Skype sale prices came as the company restructured senior management at the VoIP unit, with Skype co-founder Niklas Zennstrom stepping down as CEO of the eBay Skype unit.

The management changes and cost write-downs are seen as an admission of the lackluster performance of the Skype acquisition.

eBay announced that it had paid about US$530 million (A$600 million) to settle all of its future obligations under the earn-out agreement signed with certain Skype shareholders when eBay acquired Skype in 2005.

The earn-out agreement provided for payments of up to approximately US$1,700 million (A$1,925 million) based upon specific active user, revenue and gross profit targets that were to be achieved in 2008 and the first half of 2009.

“eBay believes that the (A$600 million) payment is reasonable given the progress and anticipated rapid growth of Skype's active user base,” the company said in a statement.

Having stepped down as Skype CEO, Mr Zennstrom will become non-executive chairman of the Skype board of directors, while eBay chief strategy officer Michael van Swaaij will become Skype’s acting CEO until a permanent successor is found.

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Skype links to Paypal to offer money tranfers

INTERNET telephone leader Skype will soon offer a money transfer service through the online payment service PayPal that lets users send money to other Skype users, cofounder Niklas Zennstrom said.

The Skype chief executive told a technology conference in Silicon Valley the company was working with PayPal on the design of the new service, which will effectively make Skype a competitor to companies like Western Union.

Many of the 171 million Skype users use the system to reduce costs in keeping contact with overseas friends and family, a group seen as strong potential users of international money transfer, Mr Zennstrom said.

The payment service, which is called Send Money, is expected to be formally unveiled in about a month. The tie-up makes sense – both Skype and PayPal are subsidiary units of online auction goliath eBay.

PayPal is already the most common way Skype users pay for premium services (like making calls to traditional phones).

Overseas observers are saying the money transfer service is likely to be one of a growing number of applications to be offered through Skype.

Third-party software developers are understood to have been encourage to look at Skype as a platform where voice is just one service. The company wants developers to build other services on top of the system, and has already announced a series of premium business services to be offered.

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