EBay's Whitman retiring, warns of tough year

EBay ebay CEO Meg Whitman announced her retirement Wednesday, and also warned Wall Street that revenue this year will be far lower than expected.

Whitman, 51, plans to step down on March 31, after 10 years at the auction giant. She will remain on eBay's board of directors. (She's also co-chair of the national finance committee for Mitt Romney's presidential campaign.)

Whitman will be replaced by company insider John Donahoe, 47, who now runs eBay's main site and other e-commerce businesses including Shopping.com. Both Whitman and Donahoe previously worked at consulting firm Bain and Co.

Donahoe may have a tough road ahead. EBay anticipates revenue between $8.50 billion and $8.75 billion this year. Wall Street analysts on average had forecast $9.02 billion.

The news, released after market close, sent eBay shares down 6.6% to $28.94 in after-hours trading. That wiped out gains recorded in recent days as rumors of Whitman's retirement spread.

"EBay is not growing as rapidly as I would like," Donahoe said. He promised changes, including new protections against auction fraud and expansion of eBay's PayPal and Skype subsidiaries. Another planned change: a new pricing model that makes it cheaper to post an item for auction. Details will be released next week.

Many of eBay's customers "are pretty unhappy," says David Steiner, president of AuctionBytes.com, a trade publication. People who sell goods on the site are particularly "frustrated by constant changes," technical problems and eBay's struggles with auction fraud, he says.

That hasn't stopped eBay from making money. Fourth-quarter revenue of $2.2 billion rose 27% from a year ago. Net income of $531 million, or 39 cents a share, rose from $346 million, or 25 cents a share.