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CNBC Exclusive Interview: David Faber Speaks Exclusively to Outgoing eBay CEO Meg Whitman and Incoming CEO & President John Donahoe on "Closing Bell"

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CNBC.com

WHEN: Wednesday, January 23rd at 4:30PM ET
WHERE: "Closing Bell"

Following is the unofficial transcript of a CNBC exclusive interview with outgoing EBay CEO Meg Whitman and incoming EBay CEO & President John Donahoe on CNBC's "Closing Bell."

All references must be sourced to CNBC.

FRANCIS: EBAY OUT WITH EARNINGS A FEW MINUTES AGO. STOCK DOWN 8% AFTER HOURS ON A DISAPPOINTING PROFIT FORECAST. OUTGOING CEO MEG WHITMAN AND THE INCOMING CHIEF ARE STANDING BY TO TALK TO CNBC. DAVID?

FABER: EBAY AT AROUND 4:00 ABOUT A HALF HOUR AGO EASTERN TIME SAID THAT LONGTIME CEO MEG WHITMAN HAS BEEN AT THE COMPANY FOR TEN YEARS WOULD BE STEPPING DOWN AS OF MARCH 31st TO BE REPLACED BY JOHN DONAHOE WHO CURRENTLY RUN THE COMPANY'S AUCTION BUSINESS. THANK YOU TO YOU BOTH FOR BEING WITH US.

WHITMAN: GLAD TO BE HERE.

FABER: TEN YEARS YOU SAID IT WOULD BE A GOOD IDEA PERHAPS TO STEP DOWN AFTER TEN YEARS FOR ANY CEO. YOU ARE ONLY 51. YOU'VE HAD A GREAT CAREER AT EBAY. WHY STEP DOWN NOW?

WHITMAN: WELL, I THINK CEOs IN OUR INDUSTRY WITH THE LEVEL OF TECHNOLOGY CHANGE, COMPETITIVE DYNAMICS, CONSUMER CHANGES SOMETIMES YOU NEED A FRESH SET OF EYES AND A NEW VISION AND I'VE HAD AN INCREDIBLE JOURNEY AT EBAY AND A COUPLE YEARS AGO IDECIDED THAT WE NEEDED TO BRING TALENT IN FROM THE OUTSIDE. I BROUGHT JOHN IN. HE'S BEEN A GREAT LEADER OF OUR MARKETPLACE BUSINESS AND HE'S READY.THE BOARD DECIDED HE'S READY. I THINK IT'S TIME TO CHANGE LEADERSHIP AND TO TURN EBAY OVERTO JOHN.

FABER: YOU ARE GOING STAY ON THE BOARD. WHY ARE YOU STAYING ON?

WHITMAN: I'M GOING STAY ON.

FABER: WHY NOT MAKE A CLEAN BREAK OF IT?

WHITMAN: WELL, I LOVE THIS COMPANY. I HAVE BEEN AT EBAY FOR TEN YEARS. I'M THE SINGLE LONGEST TENURED EMPLOYEE AT THE COMPANY.AND THE BOARD ASKED ME TO STAY HERE. JOHN ASKED ME TO STAY. IT SEEMED LIKE THE RIGHT THING TO DO.

DONAHOE: THIS HAS BEEN A VERY ORDERLY SUCCESSION AND FOR ME MEG WILLING TO STAY ON THE BOARD AND BE A COACH TO ME FOR THE NEXT NINE MONTHS IS A REAL PLUS FOR ME.

FABER: WHAT ARE YOU GOING TO DO?

WHITMAN: THE FIRST THING IS I'M GOING TO BE AVAILABLE TO JOHN AND TO THE COMPANY AND THEN I'M GOING TO DO WORK ON OUR FAMILY FOUNDATION THAT WE JUST SET UP AND TAKE A LITTLE TIME OFF AND REST. IT'S BEEN A THRILLING TEN YEARS BUT I THINK I WILL SEE WHAT COMES UP NEXT.

FABER: MEG, YOU HAD A NUMBER OF PEOPLE WHO POTENTIALLY WERE CONTENDERS FOR THE JOB. WHY DID MR. DONOHOE GET IT?

WHITMAN: I HAVE KNOWN HIM FOR 20 YEARS. I RECRUITED HIM TO EBAY THREE YEARS AGO. HE HAS TREMENDOUS LEADERSHIP SKILLS, EMPLOYEES CONNECT WITH HIM AND LOVE HIM. HE'S GREAT WITH THE COMMUNITY OFUSERS. HE UNDERSTANDS THAT SPECIAL ELEMENT OF EBAY WHICH IS THE COMMUNITY ANCHORED IN COMMERCE AND HE'S DONE A GREAT JOB OVER THE LAST THREE YEARS.HE KNOWS THE BUSINESS.HE'S LEARNED THE BUSINESS BUT BRINGS A FRESH PERSPECTIVE TO THE BOARD AND UNANIMOUS TLI WAS DECIDED THAT HE WOULD BE THE RIGHT PERSON.

FABER: WE HAVE HEARD FRESH PERSPECTIVE ALREADY IN THIS INTERVIEW. WHAT IS THAT PERSPECTIVE AND WHAT'S FRESH ABOUT IT?

DONAHOE: WELL, EBAY OBVIOUSLY IS A GREAT COMPANY. THE LAST TEN YEARS HAVE CREATED A GREAT FOUNDATION ON WHICH TO BUILD.WE'RE THE LEADER IN ECOMMERCE AND LEADER IN PAYMENT AND LEADER IN ONLINE COMMUNICATION BUS THERE'S NO DOUBT THAT THE INTERNET IS CHANGING RAPIDLY AND EXPECTATIONS ARE RISING. MY FOCUS AND THE COMPANY'S FOCUS IN 2008 WILL BE TO BUILD ON THE GREAT ASSETS THAT WE HAVE BUT MAKE EBAY AN EASIER AND SAFER PLACE TO SHOP, TO INCREASE OUR FOCUS ON OPTIMIZING OUR FIXED PRICE BUSINESS WHICH GOES ALONGSIDE OF OUR LEADING AND UNIQUE AUCTION BUSINESS AND TO CONTINUE TO GROW OUR PAY PAL BUSINESS WHICH IS BECOMING THE ONLINE PAYMENT STANDARD.

FABER: NOW, YOU ARE OBVIOUSLY THE LARGEST ECOMMERCE SITE IN THE WORLD AND CONTINUE TO BE BUT I AM CURIOUS, FEARS OF A RECESSION AND YOUR OUTLOOK, A, DID THE OUTLOOK REFLECT CONCERNS THAT YOU HAVE ABOUT THE ECONOMY. YOU KNOW IT IS BEING RESPONDED TO NEGATIVELY BY INVESTORS AND B, DOES EBAY BENEFIT OR IS IT HURT IF THERE IS A SIGNIFICANT SLOWDOWN IN THE U.S. ECONOMY?

DONAHOE: WELL, ONE OF THE THINGS THAT'S ALWAYS BEEN TRUE ABOUT EBAY IS YOU CAN FIND GREAT VALUES ON EBAY. ONE OF THE HALLMARKS IS THAT YOU CAN FIND UNIQUE ITEMS AT THE BEST PRICES ANYWHERE ONLINE AND THAT GOT VALIDATED AGAIN IN THE FOURTH QUARTER OF THIS YEAR. IT IS A GOOD VALUE IN GOOD AND TOUGHER ECONOMIC TIMES. AS FOR OUR GUIDANCE, WE TRIED TO CONSTRUCT A FINANCIAL PLAN THAT GIVES US THE FLEXIBILITY TO ACT AND IMPROVE OUR USER EXPERIENCE AND MAKE IT SAFER AND EASIER TO USE. WE THINK THE PLAN GIVES US THAT LATITUDE AND WE PLAN TO GO AFTER THIS AGGRESSIVELY.

FABER: I DON'T FOLLOW. WHAT DOES THAT PLAN MEAN SPENDING MORE ON CAPITAL INVESTMENT IN SOME WAY?EXPLAIN THAT.

DONAHOE: WE'RE GOING TO MAKE CHANGES TO OUR PRICING TO TRY TO ALIGN OUR PRICING SO THAT SELLERS SUCCESS ALLIANCE WITH A GOOD BUYERS EXPERIENCE WHILE MAKING INVESTMENTS IN TRUST AND SAFETY AND CUSTOMER SUPPORT AND OTHER WAYS THAT WILL MAKE EBAY A SAFER AND EASIER PLACE TO SHOP AS WELL AS ALLOWING OUR PAY PAL BUSINESSTO CONTINUE TO GROW AGGRESSIVELY.

WHITMAN: ONE THING JOHN AND I HAVE DONE OVER THE LAST YEAR IS SET UP A WHOLE HOST OF EXPERIMENTS AND CHANGES TO THE SITE BECAUSE WE HAVE A HUGE ECOSYSTEM. WHEN WE MAKE SMALL CHANGES, YOU DON'T KNOW WHAT THE RESULTS WILLBE.JOHN HAS ALREADY MADE CHANGES TO THE FEEDBACK SYSTEM. HE'S PLANNING CHANGES TO PRICES AND CHANGES TO PRODUCT THAT WE JUST WANT TO MAKE SURE GO AS PLANNED AND WE'RE DOING THE RIGHT THING FOR THE BUYERS AND SELLERS BUT I THINK THE FINANCIAL PLAN WAS CONSTRUCTED AS JOHN SAID TO GIVE THE COMPANYLATITUDE TO EXPERIMENT AND TO MAKE THE CHANGES THAT WE THINK ARE NECESSARY TO COMPETE IN THE NEXT TEN YEARS.

FABER: AS I UNDERSTAND IT YOU MAY BE CONSERVATIVE WITH GUIDANCE OR IT REFLECTS THE POSSIBILITY THAT SHORT-TERM SOME OF THOSE CHANGES MIGHT HAVE A NEGATIVE IMPACT OVERALL ON THE REVENUE GROWTH OREARNINGS PER SHARE GROWTH?

DONAHOE: IN 2008 WE'LL FOCUS ON USERS AND CUSTOMERS AND MAKING CHANGESTHAT IMPROVE OUR USER EXPERIENCEAND BUILD THE KIND OF LOYALTY WITH THAT MILLIONS OF EBAY USERSTHAT EXISTS TODAY.

WHITMAN: I NEVER LET JOHN BE CONSERVATIVE IN THE LAST 12 MONTHS.I DON'T THINK WE WILL BE THIS YEAR EITHER.

FABER: MEG, YOU HAVE BEEN AN ICON TOMANY AND HAVE HAD GREAT SUCCESS.ALWAYS ON THOSE LISTS OF THE MOST POWERFUL FEMALE CEOs.I'M CURIOUS, DID YOU EVER THINK ABOUT OR TRY TO BRING IN PERHAPSSOMEONE WHO SUCCEEDS YOU WHO IS ALSO A WOMAN?

WHITMAN: WELL, WE HAVE A LOT OF SENIOR WOMEN IN OUR MANAGEMENT RANKS. LORI NORINGTON WAS RECENTLY RUNNING EBAY INTERNATIONAL IS NOW GOING TO COME AND BE PRESIDENT OF ALL EBAY OPERATIONS WORKING AND THE PERSON RUNNING MERCHANT SERVICESWILL BE RUNNING EBAY NORTH AMERICA. WE HAVE TALENTED WOMEN IN THE COMPANY BUT I WANTED TO MAKE SURE WE HAD THE BEST PERSON TO RUN EBAY AND I THOUGHT THAT WAS JOHN.

FABER: AS STILL THE CEO, ARE YOU SEEING ANY SIGNS IN YOUR BUSINESS OF AN ECONOMIC SLOWDOWN?

WHITMAN: IT'S A LITTLE DIFFICULT TO TELL AT THIS EARLY STAGE.CONSUMERS ARE CLEARLY BEING MORE CONSERVATIVE. WE SEE CONSUMERS COMING TO EBAY TO LOOK FOR ITEMS OF VALUE. THAT'S ALWAYS BEEN TRUE. IN PAST TOUGH ECONOMIC TIMES THE MOST RECENT ONE AFTER THE DOTCOM BUBBLE WAS EBAY USERS FLOCK FOR VALUES.WE SAW CASUAL SELLERS BECAUSE YOU CAN TURN ASSETS INTO CASH ON EBAY IN SEVEN DAYS. I ANTICIPATE WE MAY SEE AN INCREASE IN CASUAL SELLERS SUPPLEMENTING THEIR INCOME OR IF THEY HAVE BEEN LAID OFF THEY CAN MAKE A LIVING SELLING ON EBAY.

FABER: THANK YOU TO YOU BOTH FOR BEING WITH US. CONGRATULATIONS TO YOU.





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