Jose, Katarina, Patrick, Pete

Strategic DecisioneBay purchased PayPal for $1.5B in 2002

Different from other acquisitions at the time Based on a proven and workable model

Significant impact on customer satisfaction Faster and safer transactions Compatible interfaces

Immediate Performance“Our Q4[02] results capped our most successful year ever," said Meg Whitman, President and CEO of eBay.

For the period from October 4, 2002 through December 31, 2002, PayPal recorded net revenues of $74.7 million, driven by total payment volume of $2.14 billion.

The company’s PayPal business had 40.3 million total accounts at the end of Q4-03, a 73% increase from the 23.3 million reported in Q4-02.

eBay’s Strategy Diamond

Economic Logic

Arenas

Vehicles

Differentiators

Staging and Pacing

eBay’s Value Curve

Integrity Quality Prices Convenience Variety1

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Traditional Retailer

eBay’s Value Curve

Integrity Quality Prices Convenience Variety1

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Traditional RetailerAmazon

eBay’s Value Curve

Integrity Quality Prices Convenience Variety1

2

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Traditional RetailerEbayAmazon

Industry ForcesDegree of Rivalry

Industry Growth

Complementors & Substitutes

Threat of New Entrants Industry concentration Industry Growth

Buyer Power Switching costs

Current Performance

Most popular shopping website by traffic

2010 FYE revenues of $9.2 Billion PayPal produced an approximately $1 billion in

operating profits

Overall the purchase of PayPal played a key role in the survival and growth of the company

Q&A Period