Report: EBay CEO Whitman preparing to retire

EBay CEO Meg Whitman is planning to step down from the company she has led for the past 10 years, The Wall Street Journal said Tuesday.

Whitman has been delegating more tasks to deputies over the last few months and is expected to decide on her retirement in the coming weeks, the newspaper said quoting "people familiar with the matter." John Donahue, who leads the company's auction business, is the leading candidate to succeed her, according to the newspaper.

EBay, which also operates the PayPal payment system and Skype Internet telephony service, is due to report earnings for the fourth quarter Wednesday. The quarter includes the traditionally-strong year-end holiday period and estimates see eBay reporting earnings per share of US$0.38.

The company reported a net profit of $1.1 billion in 2006 on the back of $6 billion in revenue. For 2007 eBay expects revenue to jump to $7.6 billion.

It’s generally acknowledged that among Whitman’s major hits was the acquisition of online payment services provider PayPal, while her misses include the acquisition of Skype. eBay recently wrote in an acknowledgment that it overpaid for the Internet telephony company.

The jury is also still out on eBay Express, a specialty site launched almost two years ago to attract more mainstream buyers. The site is generally considered to have failed to accomplish that main goal.

The retirement of Whitman, 51, might not be the only news coming from eBay in the near future, according to RBC Capital Markets. eBay will probably lower its financial expectations for 2008 and may be considering “a significant change” in business strategy, RBC analyst Jordan Rohan said in a research note Tuesday.

“We believe eBay will cut insertion fees, revamp the search algorithm, introduce category-specific pricing and offer volume discounts for sellers to respond to the challenge from Amazon,” RBC said in the note, which was co-authored with other analysts.

Whitman’s retirement could have the positive effect of speeding up changes in business strategies, which, according to RBC, should also include spinning off PayPal, selling Skype and cutting staff. RBC is lowering its 2008 revenue expectation to US$8.8 billion from $9.1 billion and its earnings per share expectation to $1.62 from $1.67.

Should Whitman retire, her tenure has to be considered one of the great runs in e-commerce history, said David Yaskulka, product marketing vice president at Kompolt, an online auction agency.

“There’s no doubt about that,” said Yaskulka, who from 2002 to 2006 was also CEO of eBay merchant Blueberry Boutique, which during his tenure attained eBay Platinum PowerSeller status, the second-largest type of eBay merchant in terms of sales volume.

Whitman deserves credit for steering eBay through an intense growth period during which the company expanded internationally, broadened its e-commerce scope and made important acquisitions, Yaskulka said.

Recently, Whitman has done well to again highlight the community aspects that differentiate eBay’s marketplace from other e-commerce sites, he said.

This is something that her successor must continue to develop, because it’s the mixture of e-commerce with community — in the form of its many sellers and eBay-backed charitable efforts, for example — that is eBay’s “secret sauce,” Yaskulka said.

Whitman could be faulted for not paying attention to security and safety concerns at eBay sooner, as well as to improving the buyer experience, which became a priority just in the past year, he said.

Updated at 3:55 p.m. PT to add reaction from analysts.

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