eBay 2005 Annual Report Download - page 39

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arrangements with these third party service providers on acceptable terms, there can be no assurance that we
will continue to be able to do so in the future.
We depend on key personnel.
Our future performance depends substantially on the continued services of our senior management and
other key personnel and our ability to retain and motivate them. The loss of the services of any of our
executive officers or other key employees could harm our business. We do not have long-term employment
agreements with any of our key personnel, we do not maintain any ""key person'' life insurance policies, and
our Chief Executive Officer and many other members of our senior management team have fully vested the
vast majority of their equity incentives. Our new businesses all depend on attracting and retaining key
personnel. Our future success also will depend on our ability to attract, train, retain and motivate highly skilled
technical, managerial, marketing, and customer support personnel. Competition for these personnel is intense,
and we may be unable to successfully attract, integrate, or retain sufficiently qualified personnel. In making
employment decisions, particularly in the Internet and high-technology industries, job candidates often
consider the value of the stock options they are to receive in connection with their employment. Fluctuations
in our stock price may make it more difficult to retain and motivate employees whose stock option strike prices
are substantially above current market prices. Similarly, decreases in the number of unvested stock options
held by existing employees, either because their options have vested or because the size of follow-on option
grants has declined, may make it more difficult to retain and motivate employees.
Skype's future success depends substantially upon the continued services of its senior management and key
personnel, and the loss of their services could harm our business. Several key members of Skype's engineering team
are consultants, not full time employees, who provide services to us and third parties. Many of Skype's employees
had equity in Skype prior to its acquisition by eBay. Skype equity holders were given the option of receiving their
portion of the acquisition consideration in the form of a lump-sum up-front payment or receiving a lower up-front
payment in exchange for the possibility of receiving additional consideration in the form of potential earn-out
payments tied to the achievement of certain performance targets prior to June 30, 2009. Several key members of
Skype's senior management and key employees chose to receive less up-front consideration in exchange for the
possibility of receiving the performance-based earn-out payments. Although eligible Skype employees have also
been granted eBay stock options, the earn-out payments are not tied to continued employment with Skype or eBay,
and key Skype employees may choose to depart because of differences in corporate culture, because they believe
the earn-out targets will be achieved without their contributions, or because they believe the earn-out targets are
not achievable. The loss of the services of any of Skype's senior management or key personnel could delay the
development and introduction of new features and products, and could harm our ability to grow Skype's business.
Our industry is intensely competitive, and other companies or governmental agencies may allege that our
behavior is anti-competitive.
Marketplaces
eBay's Marketplaces businesses currently or potentially compete with a number of companies providing
both particular categories of goods and broader ranges of goods. The Internet provides new, rapidly evolving
and intensely competitive channels for the sale of all types of goods. We expect competition to intensify in the
future. The barriers to entry into these channels are relatively low, and current offline and new competitors can
easily launch online sites at a nominal cost using commercially available software or partnering with any one of
a number of successful e-commerce companies.
Our broad-based competitors include the vast majority of traditional department, warehouse, discount,
and general merchandise stores (as well as the online operations of these traditional retailers), emerging online
retailers, online classified services, and other shopping channels such as offline and online home shopping
networks. These include most prominently: Wal-Mart, Target, Sears, Macy's, JC Penney, Costco, Office
Depot, Staples, OfficeMax, Sam's Club, Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC,
and Home Shopping Network.
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