Donahoe promoted as EBay’s Whitman retires
EBay Inc. elected its own candidate of change Tuesday, naming John Donahoe to replace retiring Chief Executive Meg Whitman.
After a storied decade at the helm of one of the Web’s greatest success stories, Whitman, 51, said she would step down at the end of March but remain on the board. She is handing off the challenge of reinvigorating a maturing EBay to the protege whom she recruited in 2005 from Bain & Co., where he was worldwide managing director.
Donahoe is the president of EBay’s online auction unit.
He inherits a company that is financially sound but facing a serious challenge: slowing growth in its primary business of online auctions. Already credited with making substantial improvements to the EBay shopping experience, Donahoe has been candid about his appraisal that the San Jose company has not kept pace with rising competition.
In an interview, Donahoe, 47, said he was “deeply committed” to restoring EBay to its past glory. His goals include making the auction site easier and safer to use and luring more buyers and sellers. Among new initiatives: EBay plans to reduce the fees it charges sellers on its auction site and improve the way buyers rate sellers.
“We are confident in our future, and we’re ready for battle,” Donahoe said.
Whitman said that Donahoe was the “ideal person” to succeed her and that he would bring a fresh perspective and vision. On her watch, EBay grew from a tiny online flea market where hobbyists traded Beanie Babies into an international marketplace and pop-culture icon.
Donahoe may have a button-down appearance, but Whitman said he also had a “rebellious, mischievous streak” and “twinkle in his eye” that inspired EBay executives to name a conference room “Dennis the Menace” after him.
Donahoe has spent the last several years carefully studying EBay. He’s also a regular EBay user. He sold old golf clubs on the site to benefit victims of Hurricane Katrina.
And he’s currently haggling with the seller of a volume set of music CDs because he wants to pay through PayPal. So he says he understands that EBay must work through adversity to make the kind of dramatic changes needed to revive its momentum.
That adversity was evident Wednesday. Even as EBay announced that a strong holiday season boosted an otherwise lackluster year, its less merry guidance for the current quarter and the year ahead fell short of Wall Street expectations, sending its shares tumbling in after-hours trading.
EBay reported a fourth-quarter profit of $611 million, or 45 cents a share, up 42% from a year ago. Revenue rose 27% to $2.18 billion, ahead of analysts’ forecast of $2.14 billion.
Its shares gained $1.81, or nearly 7%, to $28.94 before the earnings report, then fell back to $27.50 after hours.
Executives said the company saw growth in its marketplaces division and strength in PayPal, Internet calling service Skype, online ticketer StubHub and its classified advertising sites. EBay projected first-quarter revenue as high as $2.05 billion and 2008 sales as high as $8.75 billion.
Donahoe is focused “on what the company needs to focus on,” Standard & Poor’s analyst Scott Kessler said. “EBay still has a very strong market position and there is still a lot it can do to enhance its value proposition.”
Jeff Jordan, once in the running to succeed Whitman and now CEO of restaurant reservations site OpenTable Inc., called Donahoe a “terrific choice to lead EBay.”
“John is a talented, committed and caring person of high integrity -- traits that make him both a great leader and a wonderful person,” Jordan said.
Among Silicon Valley’s longest-serving CEOs, Whitman, who has a net worth of $1.4 billion, does not plan to be idle. She said she would remain active on corporate boards and in campaigning for former Bain colleague and Republican presidential candidate Mitt Romney. She and her husband also plan to devote time to the family foundation.
Donahoe declined to predict how long he would remain in EBay’s top job. Though she later regretted it, Whitman once remarked that she couldn’t imagine remaining CEO longer than 10 years.
“The one thing I can guarantee you is that only Meg could eight years ahead of time predict the exact date she would leave the company,” Donahoe said. “A: I won’t make a forecast, and B: I wouldn’t be able to execute on that the way Meg has.”
--
