eBay 2002 Annual Report Download - page 63

these agencies is not satisÑed with our response to current or future inquiries, the resultant investigations
and potential Ñnes or other penalties could harm our business.
We are subject to laws relating to the use and transfer of personally identiÑable information about our
users and their transfers, especially outside of the U.S. Violation of these laws, which in many cases apply
not only to third-party transfers but also to transfers of information between ourselves and our subsidiaries,
and between ourselves, our subsidiaries and our commercial partners could subject us to signiÑcant
penalties and negative publicity and could adversely aÅect us.
Acquisitions could result in operating diÇculties, dilution and other harmful consequences.
We have acquired a number of businesses, including our acquisitions of Half.com, Internet Auction,
iBazar, HomesDirect.com, NeoCom and PayPal. We expect to continue to evaluate and consider a wide
array of potential strategic transactions, including business combinations, acquisitions and dispositions of
businesses, technologies, services, products and other assets, including interests in our existing subsidiaries
and joint ventures. At any given time we may be engaged in discussions or negotiations with respect to one
or more of such transactions. Any of such transactions could be material to our Ñnancial condition and
results of operations. There is no assurance that any such discussions or negotiations will result in the
consummation of any transaction. The process of integrating any acquisition, including the acquisition of
PayPal, 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;
‚ the need to integrate each company's accounting, management information, human resource and
other administrative systems to permit eÅective management, and the lack of control if such
integration is delayed or not implemented;
‚ the need to implement controls, procedures and policies appropriate for a larger public company at
companies that prior to acquisition had lacked such controls, procedures and policies; and
‚ in some cases, the need to transition operations onto the existing eBay platform.
Foreign acquisitions involve special risks, including those related to integration of operations across
diÅerent cultures, languages, currency risks and the particular economic, political and regulatory risks
associated with speciÑc countries. Moreover, the anticipated beneÑts of any or all of our acquisitions may
not be realized. Future acquisitions or mergers could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities or amortization expenses related to goodwill and
other intangible assets, any of which could harm our business. Future acquisitions or mergers may require
us to obtain additional equity or debt Ñnancing, which may not be available on favorable terms or at all.
Even if available, this Ñnancing may be dilutive.
Problems with third parties who provide services to our users could harm us.
A number of third parties provide services to our users that indirectly beneÑt us. Such services
include seller tools that automate and manage listings, merchant tools that manage listings and interface
with inventory management software, photo hosting, and other services. In many cases we have contractual
agreements with these companies, which may give us a direct Ñnancial interest in their success, while in
other cases we have none. In either circumstance, Ñnancial, regulatory or other problems that prevent
these companies from providing services to our users could reduce the number of listings on our websites
or make completing transactions on our websites more diÇcult, and thereby harm our business.
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