eBay 1999 Annual Report Download - page 42

increases during the period following an acquisition as employees evaluate possible changes in compensation,
culture, reporting relationships, and the direction of the business. Such increased turnover could increase our
costs and reduce our future revenues. 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, especially for engineers and especially in the San Francisco Bay Area, 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.
Our new land-based auction businesses need to continue to acquire properties
The businesses of B&B and Kruse are both dependent on the continued acquisition of high quality auction
properties from sellers. Their future success will depend in part on their ability to maintain an adequate supply
of high quality auction property, particularly fine and decorative arts and collectibles and collectible automobiles,
respectively. There is intense competition for these pieces with other auction companies and dealers. In addition,
a small number of key senior management and specialists maintain the relationships with the primary sources of
auction property and the loss of any of these individuals could harm the business of B&B and Kruse.
Our new land-based auction businesses could suffer losses from price guarantees, advances or rescissions of
sales
In order to secure high quality auction properties from sellers, B&B and Kruse may give a guaranteed
minimum price or a cash advance to a seller, based on the estimated value of the property. If the auction proceeds
are less than the amount guaranteed, or less than the amount advanced and the seller does not repay the
difference, the company involved will suffer a loss. In addition, under certain circumstances a buyer who believes
that an item purchased at auction does not have good title, provenance or authenticity may rescind the purchase.
Under these circumstances, the company involved will lose its commissions and fees on the sale even if the
seller, in accordance with the terms and conditions of sale, in turn accepts back the item and returns the funds he
or she received from the sale.
We acquired real property with some of our new businesses
In connection with the acquisition of Kruse and B&B we acquired real property including land, buildings
and interests in partnerships holding land and buildings. We have no experience in managing real property.
Ownership of this property subjects us to new risks, including:
●the possibility of environmental contamination and the costs associated with fixing any environmental
problems;
●the possible need for structural improvements in order to comply with zoning, seismic, disability act or
other requirements; and
●possible disputes with tenants, partners or others.
Our market is intensely competitive
Online personal trading market is a new, rapidly evolving and intensely competitive area. The Company
expects competition to intensify in the future as the barriers to entry are relatively low, and current and new
competitors can launch new sites at a nominal cost using commercially available software. Depending on the
category of product, eBay currently or potentially competes with a number of companies serving particular
categories of goods as well as those serving broader ranges of goods. Broad-based competitors include the vast
majority of traditional department and general merchandise stores as well as emerging online retailers. These
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