President of EBay’s PayPal Quits, Triggering Anxiety
Is EBay Inc.’s management team strong enough and deep enough to fend off growing competition from Google Inc.?
Investors were asking that question Thursday after the online auctioneer announced a shuffle of senior management that was prompted by the departure of a top executive. EBay shares slumped more than 5%, closing at their lowest level since 2003.
The San Jose-based company said Jeff Jordan, president of its PayPal online payment business and considered a potential successor to Chief Executive Meg Whitman, would leave in the fall to spend more time with his family.
Rajiv Dutta, EBay’s former chief financial officer, will take over PayPal Inc. Dutta had been named president of EBay’s Skype, an Internet telephone service, in October and had moved to London. Now, Dutta will move back to the Bay Area to run PayPal.
“While EBay has a deep bench of extremely talented and proven [management], we find the management shuffle announced this morning somewhat disconcerting,” UBS Investment Research analyst Ben Schachter wrote in a report to clients.
Schachter and others on Wall Street are concerned about slowing growth at EBay.
One bright spot has been the strong performance of PayPal, which EBay acquired in 2002, but a threat surfaced last week when Google launched its own online payment service, Checkout.
Earlier Thursday, Citigroup Inc. analyst Mark Mahaney lowered his profit-growth forecast for EBay, saying Google Checkout appeared to be a more potent threat than he had initially believed.
PayPal is clearly superior in many respects, including choice of payment methods, trust and safety, and acceptance among buyers and sellers, Mahaney wrote to clients.
“But what is surprising to us is that on two key attributes -- speed of checkout for consumers and transaction fees for merchants -- Google Checkout has leapfrogged PayPal,” Mahaney said. “With only one year of development, Google has developed an integrated merchant checkout process that for consumers is materially easier and quicker to use than PayPal.”
Although potential rivals have come and gone, EBay spokesman Hani Durzy said, PayPal has 105 million registered users and transfers billions of dollars in payments each year.
Even so, EBay on Thursday added Checkout to a list of payment services its sellers cannot use to complete transactions because it doesn’t have the “substantial historical track record” that EBay policy requires.
EBay’s Durzy dismissed a Google spokeswoman’s assertion that billing and payments had been a central element of Google’s advertising services for years.
“That’s a different animal,” Durzy said. “What we’re talking about here is a payment service that allows individuals to pay one another.”
Durzy also said Jordan’s decision to leave EBay had nothing to do with the competitive landscape.
“The reality is, he has kids and a wife he wants to spend more time with,” Durzy said. “He’s worked very hard and dedicated everything he had to this company for seven years.”
Jordan’s departure comes two months after the company announced that Chief Operating Officer Maynard Webb would retire in August.
At Skype, Dutta is to be replaced by Alex Kazim, currently vice president of products for that unit. Henry Gomez will expand his Skype marketing duties to include not just North America but all markets.
Whitman is known for frequently shuffling the top ranks at EBay.
“We have the leading brands in e-commerce, online payments and online communications,” she said. “Transferring leadership across those businesses allows us to better innovate and collaborate throughout the company.”
The company also named Lorrie Norrington, former CEO of EBay’s Shopping.com service, as president of EBay International.
Norrington is to be replaced by Josh Silverman, vice president of products at Shopping.com.
EBay shares fell $1.51, or 5.3%, to $26.85 in Thursday trading. Its stock is down 38% this year.
