eBay to cut 10 percent of work force

October 6, 2008 7:10:57 PM PDT
eBay Inc., which still reaps big profits but has been struggling to attract new users, said Monday it will cut its work force by 10 percent -- about 1,600 jobs -- in an attempt to streamline its business.

eBay is going to layoff as much as 10 percent of its global workforce. The company insists the layoffs will help the company become more efficient.

But some analysts believe recent hi-tech layoffs are a symptom of how the global financial crisis is infecting Silicon Valley.

eBay employees in Campbell were not willing to discuss the company's impending layoffs of about 1,000 employees.

One confided off-camera that layoff rumors had been floating around for awhile. On Monday, those rumors were finally confirmed by eBay's CEO John Donohoe.

"We saw a real opportunity to simplify our agency to become more nimble and flexible, to respond to our customers and to free up our resources to invest in growth opportunities," said Donohoe.

The layoffs will allow eBay to free up enough of its resources to buy into two growth opportunities -- online payment service bill me later and a Danish online classified site for about $1.3 billion.

"It's a time when strong companies a get stronger and be opportunistic and that's what we're doing with these acquisitions," said Donohoe.

Some analysts see eBay's proposed layoffs as belt tightening. But the financial crisis is affecting other Silicon Valley businesses, which are all interconnected.

"As soon as you start squeezing the credit markets down everyone stops their spending on everything -- that includes everything we do in the valley," said Barrons West Coast editor Eric Savitz.

Savitz has been writing about Silicon Valley hi-tech companies for the past 15 years.

He says large layoffs like Hewlett Packard's plan to cut 25,000 over the next three years and small ones like NVIDIA trimming of 360 workers last month are a sign that financial worries are infecting Silicon Valley tech companies at an alarming rate.

Now financially strapped customers will push those concerns even deeper.

"If they can't get that credit, they slow down their purchases of everything, which includes all the stuff we make in the valley: PC's, software, disk drives and flows down to the chip industry," said

Savitz says even software companies like Oracle could also become vulnerable to the credit drought.


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