eBay 2000 Annual Report Download - page 29

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Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
This document contains certain forward-looking statements that involve risks and uncertainties, such as
statements of eBay's plans, objectives, expectations and intentions. When used in this document, the words
""expects,'' ""anticipates,'' ""intends'' and ""plans'' and similar expressions are intended to identify certain of
these forward-looking statements. The cautionary statements made in this document should be read as being
applicable to all related forward-looking statements wherever they appear in this document. Our actual results
could diÅer materially from those discussed in this document. Factors that could cause or contribute to such
diÅerences include those discussed below.
Overview
We pioneered online person-to-person trading by developing a global online trading platform that will
help practically anyone buy or sell practically anything. Our service permits sellers to list items for sale, buyers
to bid on items of interest and all eBay users to browse through listed items in a fully-automated, topically-
arranged, intuitive and easy-to-use online service that is available 24 hours a day, seven days a week. We have
extended our online oÅerings to include regional and international trading, autos, ""premium'' priced items, and
through our acquisition of Half.com and our recently introduced ""Buy it Now'' feature, we now oÅer Ñxed-
price functionality. Additionally, Billpoint provides online billing and payment solutions. We also expanded
into the traditional auction business, also called oÉine trading, with our acquisitions of ButterÑelds and Kruse.
Substantially all of our revenues come from fees and commissions associated with online and oÉine
trading services. Online revenue is primarily derived from placement fees, success fees, commissions paid by
sellers, and commissions paid by buyers for ""premium'' priced items. Sellers pay a nominal placement fee, and
by paying additional fees, sellers can have items featured in various ways. Sellers also pay a success fee based
on the Ñnal purchase price. In addition, we receive revenues from end-to-end service providers whose services
increase the velocity of transactions to the site, revenues from commercial alliances designed to build out a
category or other functions and from direct advertising which includes promotional payments from unrelated
third parties. Although we expect these end-to-end, commercial alliance and direct advertising revenues to
increase in the future, they are subject to considerable uncertainty. See ""Risk Factors Ì Our revenue from
end-to-end service providers, commercial alliances and advertising is subject to factors beyond our control.''
To date, online payment solutions provided by Billpoint and Ñxed price trading provided by Half.com have not
made signiÑcant contributions to net revenues, although we expect Billpoint's and Half.com's revenues to
increase in the future. OÉine revenue is derived from a variety of sources including sellers' commissions,
buyers' premiums, bidder registration fees, and auction-related services including appraisal and authentication.
We expect that the online business will continue to represent the majority of revenue growth in the foreseeable
future.
Acquisitions
Half.com
On July 11, 2000, we acquired Half.com. Half.com provides a Ñxed-price, person-to-person e-commerce
site allowing people to buy and sell previously owned goods at discounted prices. In connection with the
merger, we issued, or reserved for issuance, a total of approximately 5,484,000 shares of our common stock to
Half.com's existing shareholders, option holders and warrant holders. The merger has been accounted for as a
pooling-of-interests.
Internet Auction
On February 15, 2001, we acquired a majority interest in Internet Auction Co., Ltd., a South Korean
company(""Internet Auction''). Internet Auction introduced person-to-person trading in Korea when it
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