eBay diversifies as auction business cools

The company said it would pay $945 million to snap up online payment firm Bill Me Later and merge it with its dominant PayPal transaction business. A further $390 million has been earmarked for the acquisition of Danish classifieds sites BilBasen and Den Bla Avis. eBay relies on its payments unit for 28% of revenue while classifieds have become a $100 billion global market.

“We’re investing a lot of time and energy to re-accelerate growth there, that's our core,” CEO John Donahoe told reporters. ‘We're going to continue to invest in PayPal to extend that leadership position because we think it has enormous potential, and almost a once-in-a lifetime opportunity to extend that lead.’

In fact eBay needs new direction.