SAN JOSE, Calif. (AP) — In a rare defeat for eBay Inc., the online trading leader said Tuesday it will pull out of Japan, even as the company's international expansion continues with the purchase of a Taiwanese auction site.
EBay entered the Japanese market in 2000 and never got close to Yahoo! Japan Corp., which is that country's No. 1 player in online auctions. It is co-owned by the Silicon Valley Internet company and Tokyo-based Softbank Corp.
Although eBay does not charge Japanese users any fees — and did so only briefly — the site has just 25,000 items listed for sale, ranking it a distant fourth in the market. The site will close March 31, and 17 jobs will be cut.
That is not the way eBay is accustomed to doing things. It has consistently seen profits increase, even amid the dot-com implosion, and is the No. 1 auction site in all of the other 18 countries in which it operates. EBay considered buying a rival auction site in Japan but decided to pull up stakes altogether.
"We may come back to Japan sometime when factors are a little more in our favor, but they are not at the current time," eBay spokesman Kevin Pursglove said. "We never seemed to be able to execute in that area."
EBay's decision came as no surprise and was a smart move "in that they are butting their heads against the wall in that market," said John Corcoran, Internet analyst for CIBC World Markets.
"Don't throw good money after bad," he said.
San Jose-based eBay, which has more than 42 million registered users around the world, still is eagerly eyeing more Asian expansion, especially into Hong Kong and China.
EBay would not disclose how many users NeoCom has.
EBay is paying $9.5 million in cash for NeoCom, plus a yet-to-be-determined amount of working capital.
The acquisition is not expected to have a material effect on eBay's revenue this year, but the company lowered its profit outlook slightly because of costs it will incur in running the new site.