EBay CEO Whitman leaving after 10 years, promises smooth transition

SAN FRANCISCO -- Calling eBay Inc. her "baby," outgoing chief executive Meg Whitman is promising a smooth transition to a new corporate leadership team as she gives up day-to-day control of the online auction company she has led for 10 years.

"EBay is my baby in many ways, and I wanted to make sure the transition was handled in a first class way," Whitman told The Associated Press. She will remain on eBay's board of directors and make herself available to the new team, but looks forward to escaping the 24/7 grind.

"I'm going to power down a little bit," she said.

Whitman said she will continue working on presidential candidate Mitt Romney's campaign and a family foundation that focuses on education and health care.

Whitman, 51, will leave March 31. She said she began three years ago to think seriously about who would succeed her at the Internet giant she led for 10 years.

Incoming chief executive John Donahoe said during a conference call with analysts Wednesday that eBay is not growing as rapidly as he would like, and he sees the greatest opportunity for growth in increasing the site's offering of fixed-price items.

"We need to aggressively change our product, our customer approach and business model," said Donahoe, who has been heading eBay's core auction and e-commerce businesses.

Donahoe pledged to upgrade the site and change the way it charges sellers for listing items. Though details are to come later, he indicated that eBay would lower the fees that people pay to list something for sale, but raise the commission that eBay takes on successful sales.

That's a move analyst Derek Brown of Cantor Fitzgerald said will be eBay's "wild card" going forward, placing pressure on the site to turn any increase in listings into actual sales transactions.

"(The fee structure change) in itself has the potential to change the face of eBay," Brown said.

Donahoe plans on upgrading the site's search function so that if there is an influx of listings, users can still easily find what they are looking for.

Brown said Donahoe's openness about some of eBay's problems is encouraging, but "it feels as if they are pulling a lot of levers at once and that can create its own challenges."

The announcement of Whitman's departure came as eBay reported a 53 percent gain in fourth-quarter profits due to a strong holiday season. The results beat Wall Street's expectations, though the company's future guidance was tepid.

The San Jose-based company said that in the last three months of 2007, it earned $530.9 million, or 39 cents per share. In the same period a year earlier, eBay earned $346.5 million, 25 cents per share.

Revenue in the quarter rose 27 percent to $2.18 billion.

Excluding stock-option expenses and other charges, eBay said it would have earned $611 million, or 45 cents per share.

By that measure, analysts surveyed by Thomson Financial had been expecting eBay to earn 41 cents per share. EBay also exceeded Wall Street's revenue projection of $2.14 billion.

But eBay's guidance for 2008 disappointed some investors. The company expects earnings after charges to be 37 to 39 cents per share in the current first quarter. Analysts had been forecasting 40 cents per share.

EBay's projection for the full year -- $1.63 to $1.67 per share -- was in line with analysts' existing forecast of $1.66.

EBay shares fell $1.44, or 5 percent, to $27.50 in after-hours trading. They had gained $1.81 to close at $28.94 before the earnings report.

For all of 2007, eBay earned $348 million, or 25 cents per share, on revenue of $7.67 billion. That included a $1.4 billion write-down in October to account for the disappointing performance of Skype, the online telephone service eBay bought in 2005. In 2006, eBay's profit was $1.13 billion, 79 cents per share, on revenue of $5.97 billion.

Most of eBay's years have been strong since Whitman took over in 1998, when the auction site was still crippled by server outages and mainly home to hobbyists selling collectibles like Beanie Babies. Before long, though, it rose to become an incredibly diverse shopping zone, with nearly $60 billion worth of merchandise trading hands last year.