eBay Buys PayPal

[Joubert[$]]

Story here

[amykhar]

No! Say it isn't so!

[pluckyduck]

I don't think this is a good thing.

At least, that's my first reaction.

Andrea
checking to see if eBay has bought Eps yet.....

[phoenixx]

Another one bites the dust, I guess. Too bad.

[Grouch]

For as long as I've been Ebaying, PayPal has been the auction site's sworn enemy. This should get mighty interesting.

[Joubert[$]]

Here's Meg Whitman's (okay, marketing's) post on eBay's board today.

Three interesting things:
1) eBay got hammered - dropped 7 1/2 percent.
2) As part of the deal, PayPal is no longer participating in the online casino business. Okay, it's not part of the deal -- it was just announced at the same time. That's a huge hit for them.
3) PayPal was up 8% and now has a market cap of $1.31 billion! I know it's a nifty marketing idea and suckers just leave money sitting in PayPal accounts without interest, but how in the world did they build a billion dollar company?

***eBay Agrees to Acquire PayPal***

A couple of weeks ago at eBay Live, I promised you that I would continue to listen to your input as we grow the eBay marketplace. So today, I am excited to announce our plans to acquire PayPal, Inc., the most popular online payment service.

Since many of our members offer PayPal's services, this acquisition makes a tremendous amount of sense. Integrating PayPal's services into our platform is something that many of our members have asked us to do. We believe it will enhance our members' experience by allowing buyers and sellers to trade with greater ease, speed and safety.

We expect the acquisition to be finalized around year-end 2002. Until then, PayPal and eBay Payments (Billpoint) services will continue to function as independent providers of online payment services. When the acquisition is finalized, we plan to phase out eBay Payments (Billpoint) as we integrate the PayPal service. We will provide more detailed information about the eventual integration of PayPal in the weeks and months ahead.

We look forward to working with eBay Payments (Billpoint) users to ensure a seamless transition to PayPal, and with PayPal's users as we integrate PayPal into our site.

For more details, please see the press release and our Frequently Asked Questions page. Look for the webcast of our conference call at http://www.shareholder.com/ebay/.

Regards,
Meg

Investors and security holders are urged to read the proxy statement/prospectus regarding the business combination transactions referenced in this presentation, when they become available, because they will contain important information. The proxy statement/prospectus will be filed with the Securities and Exchange Commission by eBay. Investors and security holders may obtain a free copy of the proxy statement/prospectus, when available, and other documents filed by eBay and PayPal with the Commission at the Commission's web site at http://www.sec.gov. Free copies of the proxy statement/prospectus and eBay's other filings with the Commission may also be obtained by directing a request to eBay at investorrelations@ebay.com. Free copies of PayPal's filings may be obtained by directing a request to PayPal at investorrelations@PayPal.com.

[brian_igo]

I've held my tongue on this because I don't have a lot of experience with either, like the rest of the posters here. But from my novice/newbie perspective, I don't think this is such a bad deal.

I signed up for Pay Pal last week but didn't transfer any money into my account because I was struck by how much of a second rate operation it seemed. I did some digging through Google and found published stories about recent hacks on the Pay Pal system that cleaned thousands of dollars out of some users bank accounts. For what I wanted to use it for, giving them information about my bank accounts wasn't worth the risk.

Getting shed of the offshore casino business will punch a hole in the bottom line, but it is something that needed to be done. If someone like, say, Orrin Hatch decided to go after internet gambling, Pay Pal would get dragged in with it. I understand the business reasoning for wanting to be a player in that market but I don't think it is sustainable, and that it would damage the growth of the company into other areas. (Ditto for online porn.)

Meanwhile, there is huge upside for eBay on this deal. I have more faith in eBay's abilities to make Pay Pal a secure system. Partly so because I'm aware of eBay's technical capabilities, but also because of the reputation of their brand.

And that is the big payoff. With eBay's reputation behind it, PayPal has a terrific chance of fulfilling its potential of becoming the universal cash payment standard for online purchases. And that is something that is desperately needed if e-retailing is going to reach its potential.

I am a little concerned that eBay is on its way to becoming the Microsoft of online retailing. But so far eBay has been the model of a responsible and responsive tech company, and I'll give them the benefit of the doubt until they show otherwise.


Brian

[emeleel]

Bottom line, I just want to know if those of us with basic, FREE, personal accounts will still be able to have them for free. I already pay enough to Ebay for sales, I'll lose even more if I'm forced to pay a commission on the use of PayPal. I prefer PP because it's clean and neat, no waiting for the mail to arrive with a check or m.o. - but if I have to pay a fee for PP transactions, I guess that's what I'll have to do. I usually don't make much off my sales, I can't afford to get nickel-and-dimed to death.

[Joubert[$]]

I dunno, Melanie, when I was very active on eBay (10 sales or so a week), PayPal forced me to get a commercial account. That was 18 months ago. They still take merchant fees out when someone sends me money. Once a commercial account, always one.

I think that basing such decisions on volume is an okay thing.