eBay 2011 Annual Report Download - page 37

These transactions involve significant challenges and risks. Some of the areas where we may face difficulties include:
It may take us longer than expected to fully realize the anticipated benefits, such as increased revenue and enhanced efficiencies, of any or all
of our acquisitions, or those benefits may ultimately be smaller than anticipated, or may not be realized at all, which could adversely affect our
business and operating results. Future acquisitions may also require us to issue additional equity securities, spend our cash, or incur debt (and
increased interest expense), liabilities and 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. The controlling joint venture partner in a joint venture investment may have business interests, strategies or
goals that are inconsistent with ours, and business decisions or other actions or omissions of the controlling joint venture partner or the joint
venture company may result in harm to our reputation or adversely affect the value of our investment in the joint venture. Our strategic
investments may expose us to additional risks. For example, GSI's minority interest in Intershop Communications AG is governed by German
law, which could subject us to liability for certain disadvantages to Intershop if we were deemed to be in control of Intershop under German law.
We have also been sued by craigslist, which has alleged that we improperly misused confidential information from craigslist that we received as a
minority investor.
Our acquisition of GSI Commerce, Inc. exposes us to additional risks.
Our GSI business faces certain risks and challenges not shared by our other businesses, including those described under the risk factor
captions "If our GSI business is unable to enhance its platform and migrate clients to that new platform in a timely and cost-effective manner, it
would be substantially harmed" and "Changes in regulations or user concerns regarding privacy and protection of user data could adversely affect
our business."
Competition for GSI's existing and potential clients is intense, and our GSI business may not be able to add new clients or keep existing
clients on favorable terms, or at all. For example, a change in the management of a GSI client could adversely affect our relationship with that
client. In addition, many of GSI's client contracts contain service level commitments. If our GSI business is unable to meet these commitments, its
relationships with its clients could be damaged, and client rights to terminate their contracts with GSI and/or financial penalty provisions payable
by GSI may be triggered. If any existing GSI clients were to exit the business we provide services to, be acquired, declare bankruptcy, suffer other
financial difficulties, fail to pay amounts owed to GSI and/or terminate or modify their relationships with GSI in a manner unfavorable to us (in
particular with respect to the large merchants and brands that GSI serves), our GSI business could be adversely affected.
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• the need to integrate the operations, systems (including accounting, management, information, human resource and other
administrative systems), technologies, products and personnel of each acquired company, which is itself an inherently risky process;
the inefficiencies and lack of control that may result if such integration is delayed or not implemented; and unforeseen difficulties and
expenditures that may arise in connection with integration;
• 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 implement controls, procedures and policies appropriate for a larger public company at companies that prior to acquisition
had lacked such controls, procedures and policies;
• risks associated with our expansion into new international markets and doing business internationally, including those described under
the risk factor caption "There are many risks associated with our international operations" above;
• difficulties in entering new markets where we have no or limited direct prior experience or where competitors may have stronger
market positions;
• 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;
• the potential loss of key customers, vendors and other business partners of the companies we acquire following and continuing after
announcement of our acquisition plans;
•
in some cases, the need to transition operations, users and customers onto our existing or new platforms; and
• liability for activities of the acquired company before the acquisition, including intellectual property and other litigation claims or
disputes, violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities.