eBay 2010 Annual Report Download - page 18

Communications
Our Communications segment formerly consisted of Skype. Skype is a global Internet communications
company that offers a way for people in almost every country around the world to stay in touch over the Internet
through free voice and video calls, sending instant messages, SMS (text messaging) or files, and by making
low-cost calls to landline and mobile numbers. Skype primarily generated revenue through fees charged to users
to connect Skype’s Internet communications products to traditional fixed-line and mobile telephones (which we
refer to as SkypeOut minutes).
On November 19, 2009, we completed the sale of Skype to an entity (“Buyer”) owned and organized by an
investor group. As part of the sale, we maintained an equity stake in the outstanding capital stock of the Buyer
(now approximately 30%). Skype was consolidated with our results of operations through November 19, 2009
(the date that the sale of Skype was competed). Our noncontrolling ownership interest in the Buyer for periods
after the completion of the sale is accounted for as an equity investment. For additional details related to the sale
of Skype, please see “Note 4 – Skype Related Transactions” to the consolidated financial statements included in
this report.
Other Items
Employees
As of December 31, 2010, eBay Inc. and its subsidiaries employed approximately 17,700 people (including
temporary employees), approximately 11,100 of whom were located in the U.S.
Competition
We encounter vigorous competition in our businesses from numerous sources. For our Marketplaces
segment, our users can find, buy, sell and pay for similar items through a variety of competing online and offline
channels. These include, but are not limited to, retailers, distributors, liquidators, import and export companies,
online and offline auctioneers, catalog and mail-order companies, classifieds, directories, search engines,
virtually all online and offline commerce participants (consumer-to-consumer, business-to-consumer and
business-to-business), online and offline shopping channels and networks. As our product offerings continue to
broaden into new categories of items and new commerce formats, we expect to face additional competition from
other online and offline channels for those new offerings. We compete on the basis of price, product selection,
and services. Our growth rates in our most mature markets have significantly slowed and we are losing market
share in some segments. For our Payments segment, our users may choose to pay through a variety of alternative
means, including credit and debit cards, automated clearing house and bank wires, other online payment services,
offline payment methods such as cash, check or money order and using mobile phones. To compete effectively,
we may need to expend significant resources in technology and marketing. These efforts may be expensive and
could reduce our margins and have a materially adverse effect on our business, financial position, operating
results and cash flows and reduce the trading price of our stock. Despite our efforts to preserve and expand the
size and diversity of our users’ online community and enhance the user experience, we may not be able to
continue to manage our operating expenses or increase or maintain our revenue to avoid or reduce a decline in
our consolidated net income or avoid a net loss. For more information regarding these risks, see the information
in “Item 1A: Risk Factors” under the captions “Our industries are intensely competitive” and “We are subject to
regulatory activity and antitrust litigation under competition laws.”
Seasonality
We expect transaction activity patterns on our websites to mirror general consumer buying patterns. Please
see the information in “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of
Operations” under the caption “Seasonality.”
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