With EBay layoffs possibly looming, is Silicon Valley slowing down like it's 2000?

If the Wall Street meltdown wasn't depressing enough, Google chairman Eric Schmidt and founder Sergey Brin fielded questions about the state of the Silicon Valley economy Wednesday. Their conclusion: Not so good.

And it's not just that the whole Web 2.0 thing is starting to seem played-out. A malaise has been creeping into the high-tech sector.

Sources of funding for start-ups have been drying up. Major companies, including Google, have seen their once soaring shares decline (even after rising nearly 5% today, the Nasdaq is down 17% in 2008). Hewlett-Packard and others are laying off thousands of employees. Nielsen Online said today that online banners and other display ads, lifeblood for many Web companies, declined 6% in the first half of the year over the same period last year, as financial services companies in particular cut back.

And this week, people are expecting more layoffs at EBay -- as many as 1,500 folks. It all began with an article in Barron's on Monday that cited a report from a Colorado investment research firm, suggesting that EBay would cut 10% of its 15,000 employees. Wedge Partners' Brian Blair and Ryan Hunter wrote that the company's business was "deteriorating."

Of course, EBay doesn't comment on rumors or speculation. And many analysts are bullish on the moves by Chief Executive John Donahoe, who took the reins from Meg Whitman in March, to shore up the San Jose auction company's business. But Wedge Partners is giving EBay a low bid of confidence. A key factor will be the performance of a new search platform the online auction powerhouse is rolling out soon, Wedge said.

There is no question that EBay has had its share of challenges this year. And it may need to trim its workforce, analysts say. Trouble is, they say, EBay is probably not alone.

-- Jessica Guynn

Photo: EBay Chief Executive John Donahoe. Credit: EBay

Comments

[Jade]

The problems feebay has are caused by feebay alone. They have abandoned their core customer base long ago and opted for corporate greed instead of the loyal customers who put them on the map. It's called Karma. Ye reap what ye sow. I now sell on AlsoShop (www.alsoshop.com) along with several other free auction alternatives and have not looked back at the feebay beast ever since.

[DennisSC]

Maybe, or maybe not, but it sounds to me like the credit crunch is effecting things in the valley pretty much the way it's effecting things everywhere else.

Time for a change?

[Venkat]

To save Silicon Valley companies, it is time to outsource to India

[Roderick St John]

Ebay's executive team is inept on a good day and a disaster on most.

Their recent changes meant to improve the site have resulted in seller flight, buyer confusion and an open door for even more scammers. CEO Donahoe and President Norrington's irrational and short sighted decisions are destroying the company's brand.

Ebay was a fun place to buy and sell. The fun is gone thanks to Donahoe and Norrington.

[CEEZEE]

BLAH BLAH BLAH.......EBAY KILLED THE GOOSE THAT LAYED THE GOLDEN EGG......... READ ON ......and you will see the biggest reason for ebays declie.......dont blame the economy........

eBay...are you sure you know what you are doing? One thing for sure is the auction format is dead if you are using a buy it now. Sure you may get bids if you start at a ridiculous low price. That may work for some unique items and you are happy to get whatever it sells for. But for items that require a set price to make a profit that's not possible. The new best match and search standing has killed the auction format. Unless your search standing is at "raised" you have a very slim chance of selling your items. Prior to the changes 20% of my auctions sold the first time out. At 20 % I could still make a profit. Since the changes and with my search standing at "standard" my sell thru rate is down to 8%. At 8% I can barely cover ebays fees. So I stopped listing core auctions. I was listing 200 auctions per day. That's a lot of fees ebay was getting. Just for the record I have been a gold power seller for almost 11 years. I have a positive feedback of 99.2%. My DSR's are above ebays 30 day and ebays 12 month average. That puts me in "standard" search. Does that sound logical to anyone? I have 2 negatives in the last 30 days. Both unwarranted, but nonetheless they are there to stay. No way of removing them. 32000 positives to date. So with my feedback and track record I can't reach "raised" search status?? Who can. If all it takes is 2 people to drop you a negative to run your business into the ground then the system is lopsided. It is costing me a lot of money. It is costing ebay a lot of money. I have discussed this at lenght several times with my "top seller account manager" . It has fallen on deaf ears. eBays attitude is that they are going to do what they want, right or wrong, regardless of how much money the sellers lose and how much they lose. Am I the only one? From what I am reading it seems pretty widespread. I dont see too many sellers jumping up in ebays defense. Ok.....so much for the old, now lets get to the new. eBay is pushing us towards the fixed price 35 cent maximum fee listing. Great. Lower up front costs. But higher FVF. Great. I dont care because the FVF is only if you sell an item. No more guessing how many items will sell out of my auctions. Great. But think again. The 35 cents is all you pay for an item to be listed in multiple quantity. And the auction is good for 30 days. A hugh drop in listing fees. In a 30 day period I would list about 6000 listings at an average cost of 55 cents per listing. Do the math. About 3300 for listing fees for the month. Since that is no longer an option for me because of the low sell thru rate, I am now listing with the fixed price 30 day format. I have a total of 525 items to list. Total to list them all as a fixed price is 183.75.....Quite a big difference from the 3300.00 I was paying before. Now I am not a genius but it doesnt take a genius to figure out that ebay has lost 3100.00 in listing fees from just little old me! Ok, how do they plan on making that up. They plan on making it up in the new higher FVF. Great. As long as the items sell.....and it is going to take a lot of sales to make that up....higher FVF or no higher FVF. The search standing and best match are going to stay the same. Based on the results from the last 2 days I am calculating about 200 -250 sales from those 525 items, unless the search standing changes. Before the changes my 6000 listing would have brought me 1200 items sold. EBAY.....DO THE MATH!! 1200 sales before.......250 now!!! I must have missed the definition of GROWTH when I was in school. But at least the buyer experience is better. The 2 buyers who left me the negatives must be happy. AT LEAST SOMEONE IS HAPPY!!

[elfoldo]

How long will ebay disregard the input from the very people who put them on the map in the first place? It's a dangerous game disrespecting those who have brought you to the status as the number 1 online auction site. This will be short-lived with the current mentality in the ebay board-room. They forget that word of mouth is the advertising that has the most lasting impact on people. When you recommend a service or anything for that matter...people listen. That also works the other way. When you tell people to avoid certain businesses, they tend also to listen. Ebay may well think they know better than everyone else, except they have overlooked one huge factor. They haven't accounted for the widespread backlash that is growing daily. Ebay is getting a new label; they are now labelled a poorly managed, high fee, user unfriendly site that doesn't alllow sellers to make a decent profit off of their items. Not to mention; Scambay, Greedbay, Feebay, These types of names will stick just as well as their original name...which escapes me now.

All this can only lead to sellers moving to other sites and likely never returning...no matter how they try to sweeten the terms and conditions of their site. I personally have been happily selling on a couple other free sites and have had great success. I also love the fact that I actaully take home my profits and don't have to give them to GREEDBAY...not a penny. I, and many other have become ebay's worst enemy. We ARE the competition, and just like we made ebay, we'll make another site...and in the process ebay will be adversely affected. To what degree I'm not sure...but, looking at their stock lately, I'd say they may well be in sold or fold mode soon.