EBay's Whitman To Retire

Long-time eBay chief Meg Whitman is planning to retire, the WSJ reports ($). A decision on timing could come “within weeks”; should be an interesting earnings call Wednesday.

We think the move will be good for eBay’s stock price and, likely, good for eBay. Meg had a strong run, especially in the early years, but eBay has lost its strategic focus, and we think the company will benefit from having a new leader. Meg ‘s departure was a key element of our Four Step Plan to Fix eBay.

John Donahoe, president of the company’s auction unit, will likely replace Meg. We link to an interview with him below.

From the Journal:

Ms. Whitman’s retirement would come at a critical point for eBay. The company’s auction business, which allows individuals to buy and sell items online to the highest bidder or at a fixed price, accounts for more than two-thirds of eBay’s nearly $6 billion in annual revenue but has experienced slowing growth rates for the past few years. Any efforts to reverse the slowdown could involve drastic changes that may be more palatable under a new CEO…

The timing of Ms. Whitman’s retirement is of her own choosing, say people familiar with the situation. Not long after she joined eBay, Ms. Whitman declared that no CEO should stay more than a decade in the same job because people need new challenges and organisations need fresh perspectives. While she has backed away from that comment in recent years, Ms. Whitman now appears to be making good on that early pledge as she approaches her 10-year anniversary as eBay CEO this March.

The remaining elements of our 4-step plan for eBay:

  1. Sell Skype. Skype has never had any real synergy with eBay (unlike PayPal, which does). Despite falling short of of its initial goals, Skype has done OK, and eBay could probably sell it to Yahoo, Google, or Microsoft for about $4 billion (10X revenue). eBay should sell the company, remove the distraction, and use the cash to buy back stock and make truly complementary acquisitions.
  2. Cut prices. Sellers are up in arms about two things: A) eBay’s high upfront listing fees, which create a risk that sellers will lose money on products that don’t sell, and B) eBay’s overall pricing. eBay should take a page out of Amazon’s book and cut prices significantly. This will force competitors out of the market and create a better value proposition for sellers. Yes, it will also result in a major short-term hit to profit margins and the stock. But it would be the smart move long term.
  3. Invest far more money in improving the buying experience. As eBay’s John Donahoe has recently observed, eBay’s interface and search tools are a joke. The company should spend what it takes to build an Amazon-quality buying experience. Yes, this will be a multi-year process, and, yes, it will cost a lot of money. But making the place a better experience for buyers is crucial.

See Also:
Fixing eBay: Our Four Step Plan
Interview With eBay’s John Donahoe, Possible Next CEO
Yes, Amazon Should Buy eBay
eBay’s Real Problem
eBay May Announce Fee Change Next Week, Experts Worried
SAI’s Complete eBay Coverage

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