eBay 2009 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2009 eBay annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

We maintain a portion of Shopping.com’s research and development facilities and personnel in Israel, and
in January 2008 we acquired Fraud Sciences Ltd., an Israeli company. As a result, political, economic and
military conditions in Israel affect those operations. The future of peace efforts between Israel and its
neighboring countries remains uncertain. Increased hostilities or terrorism within Israel or armed hostilities
between Israel and neighboring countries or other entities could make it more difficult for us to continue our
operations in Israel, which could increase our costs. In addition, many of our employees in Israel could be
required to serve in the military for extended periods of time under emergency circumstances. Our Israeli
operations could be disrupted by the absence of employees due to military service, which could adversely affect
our business.
Acquisitions, joint ventures and strategic investments could result in operating difficulties, dilution, and other
harmful consequences.
We have acquired a number of businesses in the past, including, most recently, Gmarket in Korea, Bill Me
Later in the United States and Den Blå Avis and BilBasen, classified businesses in Denmark. In November 2009,
we completed the sale of Skype to an entity (Buyer) owned and organized by an investor group and received,
among other things, an equity stake of approximately 30% of the outstanding capital stock of the Buyer. 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 and
strategic investments. At any given time we may be engaged in discussions or negotiations with respect to one or
more of these types of transactions. Any of these transactions could be material to our financial condition and
results of operations. The process of integrating any acquired business may create unforeseen operating
difficulties and expenditures and is itself risky. The areas where we may face difficulties include:
• diversion of management time, as well as a shift of focus from operating the businesses to issues
related to integration and administration, particularly given the number, size and varying scope of our
recent acquisitions;
• declining employee morale and retention issues resulting from changes in, or acceleration of,
compensation, or changes in management, 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 effective 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;
• in the case of foreign acquisitions, the need to integrate operations across different cultures and
languages and to address the particular economic, currency, political, and regulatory risks associated
with specific countries;
• in some cases, the need to transition operations, users, and customers onto our existing platforms; and
• liability for activities of the acquired company before the acquisition, including violations of laws,
rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities.
Moreover, we may not realize the anticipated benefits of any or all of our acquisitions, or may not realize
them in the time frame expected. Future acquisitions or mergers may require us to issue additional equity
securities, spend our cash, or incur debt, liabilities, amortization expenses related to intangible assets or write-
offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights
of our stockholders.
In addition, we have made certain investments, including through joint ventures, in which we have a
minority equity interest and lack management and operational control. These investments may involve risks. For
33