eBay 2001 Annual Report Download - page 40

‚ the continued Ñnancial strength of our commercial partners and technology suppliers;
‚ the level of use of the Internet and online services;
‚ increasing consumer acceptance of the Internet and other online services for commerce and, in
particular, the trading of products such as those listed on our websites; and
‚ general economic conditions and those economic conditions speciÑc to the Internet and e-commerce
industries.
Our limited operating history and the increased variety of services oÅered on our sites, makes it
diÇcult for us to forecast the level or source of our revenues or earnings accurately. We believe that
period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon
them as an indication of future performance. We do not have backlog, and a substantial portion of our net
revenues each quarter come from transactions for items that are listed and sold during that quarter. Our
operating results in one or more future quarters may fall below the expectations of securities analysts and
investors. In that event, the trading price of our common stock would almost certainly decline.
We may not maintain proÑtability.
We believe that our continued proÑtability will depend in large part on our ability to do the following:
‚ maintain suÇcient transaction volume to attract buyers and sellers;
‚ manage the costs of our business, including the costs associated with maintaining and developing
our websites, customer support and international and product expansion;
‚ increase our brand name awareness; and
‚ provide our customers with superior community and trading experiences.
We are investing heavily in marketing and promotion, customer support, further development of our
websites, technology and operating infrastructure development. The costs of these investments are expected
to remain signiÑcant into the future. In addition, many of our acquisitions require continuing investments
in these areas and we have signiÑcant ongoing contractual commitments in some of these areas. As a
result, we may be unable to adjust our spending rapidly enough to compensate for any unexpected revenue
shortfall, which may harm our proÑtability. The existence of several larger and more established companies
that are enabling online sales as well as newer companies, some of whom do not charge for transactions on
their sites and others who are facilitating trading through other pricing formats (e.g., Ñxed-price, reverse
auction, group buying, etc.) may limit our ability to raise user fees in response to declines in proÑtability.
In addition, we are spending in advance of anticipated growth, which may also harm our proÑtability. In
view of the rapidly evolving nature of our business and our limited operating history, we believe that
period-to-period comparisons of our operating results are not necessarily meaningful. You should not rely
upon our historical results as indications of our future performance.
Acquisitions could result in dilution, operating diÇculties and other harmful consequences.
We have acquired a number of businesses, including our acquisitions of Half.com, Internet Auction,
iBazar and HomesDirect.com and may in the future acquire businesses, technologies, services or products
that we believe are strategic. The process of integrating any acquisition may create unforeseen operating
diÇculties and expenditures and is itself risky. The areas where we may face diÇculties include:
‚ diversion of management time (at both companies) during the period of negotiation through closing
and further diversion of such time after closing, as well as a shift of focus from operating the
businesses to issues of integration and future products;
‚ declining employee morale and retention issues resulting from changes in compensation, reporting
relationships, future prospects or the direction of the business;
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