January 23, 2008 1:28 PM PST

eBay CEO Meg Whitman to step down

Posted by Elinor Mills

Updated at 3:20 p.m. PST with more background, analyst comment.

Meg Whitman is stepping down as chief executive of eBay after a decade, allowing a trusted insider to respond to slowed growth at the online auction pioneer.

Whitman has long said that every CEO should step down after 10 years to seek new professional challenges and make room for fresh leadership. Following her own edict, she will step down March 31 while remaining on the board.

"It's time for eBay, and this community, to have a new leadership team, a new perspective, and a new vision," she wrote on the company blog. A report that she would step down appeared Tuesday in The Wall Street Journal.

Meg Whitman

(Credit: eBay)

Replacing her is John Donahoe, head of eBay Marketplaces, whom Whitman recruited in 2005. Donahoe is well-respected by investors and board members, analysts said.

Whitman joined eBay in March 1998 and successfully navigated it through the dot-com boom and bust and on to near cult-like popularity with what was known as the "eBay economy." Through eBay, anyone with an Internet connection could find obscure collectibles or turn their dusty garage treasures into cash.

Now, the company faces growing competition from Amazon.com along with what one analyst calls "buyer fatigue" following years of revenue leaps.

"Whitman wasn't as innovative as her counterparts at Amazon and elsewhere...They definitely need a bit of a change of direction," said Aaron Kessler, an analyst at Piper Jaffray. "The biggest challenge is buyer activity. There's been buyer fatigue in the last year or so, with fewer people coming to the site and coming less often."

Sales are still growing, just not at the pace they once were. The company reported Wednesday that fourth-quarter profits rose 53 percent from a year earlier to $531 million, and revenue increased 27 percent to $2.18 billion.

However, the stock dropped about 6 percent in after-hours trading to $27.15 after eBay warned that revenue in the current quarter and for the full year would be below analyst estimates.

While auctions represent the majority of eBay's revenue, growth was led by other units, including PayPal, online ticketing site StubHub, Internet phone company Skype, classifieds, and advertising.

In an attempt to reverse the slowed growth, eBay has redesigned its auction site and cut some fees for listing items. Executives have hinted at further, more drastic changes to the company's listing and selling fees.

eBay took a write-down last year for its purchase of Skype, forcing it and others to reassess the value of the start-up.

Despite the concerns, the impact of Whitman's tenure should not to be overlooked, said Scott Devitt, an analyst at Stifel Nicolaus & Co.

"Meg Whitman was a phenomenal success running eBay for a decade," Devitt said. "She has overseen an 88-times increase in revenue and a more than 1300 percent return in stock since the IPO...What's happened is purely maturity and not necessarily bad business."

CNET News.com's Dawn Kawamoto contributed to this story.