eBay Faces Double Blow as Key Executive Leaves and Analyst Warns of Google Threat

Strategic Insights -

EBay's shares fell sharply Thursday after the company announced that its president of North America was leaving, and an analyst cut his earnings growth estimate for the company due to concerns about Google's new online payment service posing a significant threat to its core business. The departure of Jeff Jordan, a key executive who had been seen as a potential successor to CEO Meg Whitman, comes as the company is integrating various acquisitions and seeking to stimulate growth in its core markets.

Key Takeaways:

  • Jeff Jordan, president of eBay's North America division, is leaving the company to spend more time with his family, and will be replaced by Rajiv Dutta, who has been with the company since 1998.
  • Rajiv Dutta will take on the role of president of eBay's North America division, in addition to his existing responsibilities as chief financial officer and head of strategy.
  • The analyst community is concerned about eBay's long-term position, with Lehman Bros. analyst Douglas Anmuth calling Jordan's departure "highly significant" and Citigroup's Mark Mahaney cutting his earnings growth estimate for eBay.
  • Google's new online payment service, Google Checkout, is seen as a significant threat to PayPal's core business, with Mahaney calling it "faster, easier, and less expensive" to use than PayPal.
  • eBay's shares fell $1.37, or 4.8 percent, to $26.99 on the Nasdaq Stock Market following the announcement of Jordan's departure and Mahaney's earnings estimate cut.
  • eBay faces challenges in integrating its various acquisitions, including the $2.6 billion purchase of Skype and the $685 million acquisition of Shopping.com.

Statistics:

  • eBay's shares fell $1.37, or 4.8 percent, to $26.99 on the Nasdaq Stock Market.
  • Relief from Meg Whitman over Jeff Jordan's departure led to "eBay has very deep management bench strength," she said, calling that "a testament to the strong management team that's been built over the last five or six years."
  • Citigroup's Mark Mahaney cut his target price for eBay to $40 from $51.
  • Google Checkout has been under development for less than a year and is seen as a significant threat to PayPal's core business.

Sources:

  • Dan Goodin, The Associated Press.
  • Lehman Bros. analyst Douglas Anmuth.
  • Citigroup's Mark Mahaney.
  • EBay's CEO Meg Whitman.