eBay 2002 Annual Report Download - page 49

‚ the timing of payments to us and of marketing and other expenses under existing and future
contracts;
‚ the success of our brand building and marketing campaigns;
‚ 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, for the trading of products such as those listed on our websites;
‚ general economic conditions and those economic conditions speciÑc to the Internet and e-commerce
industries; and
‚ geopolitical events such as war, threat of war or terrorist actions.
Our limited operating history and the increased variety of services oÅered on our websites 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 substantially all of our net
revenues each quarter come from transactions involving sales or payments during that quarter. Due to the
inherent diÇculty in forecasting revenues it is also diÇcult to forecast income statement expenses as a
percentage of net revenues. Quarterly and annual income statement expenses as a percentage of net
revenues may be signiÑcantly diÅerent from historical or projected rates. 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 our level of proÑtability.
We believe that our continued proÑtability at historical levels 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, fraud and chargebacks and international and product expansion;
‚ increase the awareness of our brands; 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 other companies, some of whom do not charge for transactions on
their sites and others who are facilitating trading through varied pricing formats (e.g., Ñxed-price, reverse
auction, group buying) 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.
Our integration of PayPal may be diÇcult.
While eBay has acquired smaller companies in the past, the acquisition of PayPal represents by far
the largest acquisition by eBay to date. We expect that the process of integrating PayPal's business into
47