UPDATE 4-eBay zeroes in on PayPal in much-needed overhaul
* CEO tells Reuters PayPal is "second core" business
* Warns of slowing marketplaces growth in 2009
* Will "maximize" Skype value
* Shares close 4.77 pct higher (Recasts; adds CEO quotes, outlook, financial details)
SAN JOSE, Calif., March 11 (Reuters) - EBay Inc (EBAY.O), fending off worries that its best days are over, hopes to transform itself by galvanizing growth at its PayPal payments system and jump-starting its lagging core business, top executives said on Wednesday.
Best known as the Internet's premier auction site, eBay expects its burgeoning PayPal division to spearhead growth in global revenues to $10-12 billion and underpin sedate -- but steady -- single-percentage annual earnings growth by 2011.
To get there, Chief Executive John Donahoe vowed to pursue "ruthless" change in its marketplaces business that began with auctions but now encompasses fixed-price sales and even classified ads.
Donahoe told Reuters in an interview that eBay had befuddled Wall Street in recent years by forging a three-pronged business -- eBay, PayPal and Web-based telephone company Skype -- with less emphasis on its once-preeminent auctions.
"EBay was the big leader out of the gates, but we're going through a change," Donahoe said. "Every leader in every business has to go through periods of change."
But skeptical analysts said eBay signaled few dramatic shifts on Wednesday at its core marketplaces unit beyond ongoing efforts to capture more sellers and buyers and regain the market share relinquished to rivals, especially online retailer Amazon.com (AMZN.O).
The San Jose-based online giant, which did not provide a full-year outlook in January [ID:nLM73754], said adjusted earnings per share would grow in the mid-single digits on a percentage basis from 2009 to 2011. [ID:nWNAB3042]
EBay can also save $2 billion over 3 years by trimming processing costs, enhancing online customer support to avoid resource-wasting processes, and more targeted marketing, Chief Financial Officer Bob Swan said.
Within two years, marketplaces should see $5 billion to $7 billion in revenue, eBay said, spurred by search, catalog and platform improvements. That compares with 2008's $5.6 billion.
Still, Collins Stewart analyst Sandeep Aggarwal said Wall Street wanted "more tangible evidence of sustained recovery."
"There is nothing new they gave us to make us feel more positive," Aggarwal said. Continued...
