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According to a report from the 451 Group, the third quarter was horrible for tech M&A. With the financial crisis, it's tough to get buyers interested in deals.
But, today we got some relief; that is, eBay (NASDAQ: EBAY) agreed to shell out $820 million in cash for Bill Me Later. In fact, the company also paid $390 million for bilbasen.dk, which is a leading classifieds operator in Denmark.
At the same time, eBay plans to slash 10% of the workforce (amounting to about 1,000 employees). With an impending global recession, the environment is likely to be pretty bad for consumer platforms.
Thus, with the Bill Me Later transaction, there may be some traction -- especially with the PayPal business. But again, eBay will need to demonstrate skill with integration (which can be particularly tough in the tech world). Besides, eBay's M&A track record has been spotty, specially since its Skype deal.
Bill Me Later will certainly be costly. While the company is growing quickly, its revenue is only $150 million. Besides, the deal will dilute eBay's 2009 earnings by 6 cents to 13 cents per share. Also, might the credit crunch result in some problems for Bill Me Later?
More importantly, eBay announced that revenue will be at the low end of its forecast for Q3. In other words, the company realizes it needs to make some big moves to keep up the momentum.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
10-06-2008 @ 10:56AM
debora polster said...
Watching Donahoe on CNBC...This MAN is CLUELESS re the business he took over... Ebay sellers are FLEEING the site in droves and tons of others would love to go elsewhere but cannot..He does not understand the culture of Ebay, is closed to feedback of his customers..He has single handedly killed a unique and successful business..raised rates, lowered services...He is looking to become just a regular retail biz, no different than Amazon or Walmart..Who needs another site like those?
10-06-2008 @ 2:55PM
Sandy said...
Wow I though ebay was going under lots of going out business yard sales from ebay sales in MI As many cant make a profit after paying there high fees Ebay makes the profits unless you sell big price items Not the little guy selling under 10.00 items and last week since Financial Crisis I hear sellers are leaving in hurry But there is site called plunderhere.com with free listings Ebay I think your greed has taken over
10-08-2008 @ 10:34AM
Mozelle said...
I wonder how low eBay will have to go before they start paying investors a dividend?
Today eBay down to $16.00 dollars!
I think If I were Danahoe, and eBay is making all that money they claim to make I would announce a Dividend at this point. I would show my investors that I care about them and their money they have entrusted in him to preserve and grow!