EBay to lose exec amid rival's threat
By ASSOCIATED PRESS
Published July 7, 2006
SAN JOSE, Calif. - EBay Inc. faced a double blow Thursday as it announced a key executive's plans to leave and an analyst said Google Inc.'s new online payment service represents a bigger threat than expected to the Internet auction company's health.
Jeff Jordan, who most recently was president of eBay's PayPal payment business, led eBay's North America division from 2000 to 2004 and had been presumed by some analysts as the likely successor to chief executive Meg Whitman.
He said he wants to spend more time with his wife and two children.
He will be replaced by Rajiv Dutta, who has been with the company since 1998, serving as chief financial officer, head of strategy and president of Skype, the Internet phone service eBay acquired last year.
One report, by Lehman Bros. analyst Douglas Anmuth, said Jordan's departure was "highly significant" because it comes as eBay is facing new challenges and competitive threats.
Whitman said in an interview that she was undaunted by Jordan's departure, noting that Dutta and other executives taking new roles were well acquainted with eBay's business.
"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."
The disclosure of Jordan's plans came the same day that another analyst, Citigroup's Mark Mahaney, cut his earnings growth estimates for eBay, based on his analysis of Google Checkout, an online payments service unveiled last week. Mahaney slashed his target price for eBay to $40 from $51.
Mahaney said he found Checkout, which has been under development for less than a year, to be faster, easier and less expensive than PayPal.
"As we see it, this speaks volumes about Google product development skills and PayPal's lack of innovation," Mahaney wrote.
"As the growth potential of PayPal off of eBay has been part of our core investment thesis on the stock, we view this Checkout development as materially raising eBay's risk profile."
Dutta declined to say whether eBay intended to lower PayPal's fees to address its competition.