eBay 2008 Annual Report Download - page 21

ITEM 1A: RISK FACTORS
Risk Factors That May Affect Results of Operations and Financial Condition
The risks and uncertainties described below are not the only ones facing us. Other events that we do not
currently anticipate or that we currently deem immaterial also may affect our results of operations and financial
condition.
Our operating results may decline.
Our operating results have varied on a quarterly basis during our operating history. Our operating results may
fluctuate significantly as a result of a variety of factors, many of which are outside our control. Factors that may
affect our operating results include the following:
• general economic conditions, including the possibility of a severe and protracted recession in the U.S. and
worldwide economic slowdown; recent disruptions to the credit and financial markets in the U.S. and
worldwide; and those economic conditions specific to the Internet, ecommerce and payments industries;
• our ability to retain an active user base, attract new users, and encourage existing users to list items for sale,
purchase items through our websites, or use our payment service or communication software and products,
especially when consumer spending is contracting;
• our ability to reduce the loss of active buyers and sellers and increase activity of the users of our
Marketplaces business, especially with respect to our top buyers and sellers, and especially in the U.S.,
Germany and the U.K.;
• our ability to successfully integrate and manage businesses that we acquire, including new needs to manage
credit risks and bad debts following our acquisition of Bill Me Later in November 2008;
• our ability to manage funding costs associated with our new Bill Me Later business;
• the volume, velocity, size, timing, monetization, and completion rates of transactions using our websites or
technology;
• the amount and timing of operating costs and capital expenditures relating to the maintenance and expansion
of our businesses, operations, and infrastructure;
• the primary and second-order effects of previously announced and possible future changes to our pricing,
products and policies, including, among other changes: a reduced emphasis on upfront fees (e.g., insertion
fees for listings) and corresponding increases in success-based fees (e.g., final value fees for sold items); new
algorithms for determining which listings appear at the top of searches (Best Match); changes to buyer and
seller feedback criteria; tighter seller standards, which may restrict some sellers from selling on our websites
even if they have been able to do so historically; new restrictions or holds on payments made to certain
sellers or in connection with certain categories of higher-risk transactions; new incentives and rewards for
top PowerSellers; increased protection for buyers who pay for eligible transactions on eBay.com using
PayPal, as well as improved seller protection for U.S. eBay sellers against certain claims, chargebacks and
reversals; lower insertion fees for, and extended duration of, listings of fixed-price items; shipping and
handling limits on certain categories of items (e.g., media); and requiring sellers to accept at least one
accepted payment method (and restricting sellers from referencing non-permitted payment methods,
including paper forms of payment such as checks and money orders), on eBay.com in the U.S. for most
categories of items;
• regulatory and legal actions imposing obligations on our businesses or our users, including the injunction
related to certain cosmetic and perfume brands (see “Item 3 — Legal Proceedings” below);
• new laws or regulations, or interpretations of existing laws or regulations, that impose liability on us for
actions of our users or otherwise harm our business models or restrict the Internet, electronic commerce,
online payments, or online communications;
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