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CNBC TRANSCRIPT: CNBC EXCLUSIVE: CNBC'S "FAST MONEY HALFTIME REPORT" TALKS WITH JOHN DONAHOE, CEO OF EBAY, TODAY

John Donahoe_22807228
eBay

WHEN: TODAY, MONDAY, MARCH 28, 2011

WHERE: "FAST MONEY HALFTIME REPORT" AT 12:40 PM ET

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with John Donahoe, CEO of eBay, on CNBC's "Fast Money Halftime Report."

All references must be sourced to CNBC.

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MELISSA LEE: TODAY'S MERGER MONDAY NEWS. EBAY MAKES A BIG BUY NOW SNAPPING UP E-COMMERCE AND DIGITAL MARKETING COMPANY GSI COMMERCE FOR $2.4 BILLION IN CASH AND DEBT. WE'RE JOINED EXCLUSIVELY BY THE CEO OF EBAY, JOHN DONAHOE. JOHN, A PLEASURE TO HAVE YOU WITH US.

JOHN DONAHOE: NICE TO BE HERE, MELISSA.

LEE: WHAT IS YOUR VISION NOW FOR EBAY BECAUSE IT DOES SEEM YOU'RE MOVING MORE TOWARDS BEING AN ONLINE OR MOBILE PAYMENT COMPANY.IT ALMOST SEEMS LIKE YOU SHOULD JUST CHANGE YOUR NAME TO PAYPAL AT THIS POINT.

DONAHOE: WHAT EBAY HAS ALWAYS BEEN ABOUT IS CONNECTING BUYERS AND SELLERS. AND THAT'S WHAT EBAY DOES, CONNECTING SMALL BUSINESSES TO BUYERS AROUND THE WORLD.THAT'S WHAT PAYPAL DOES, CONNECTING BUYERS AND SELLERS TO WEBSITES AROUND THE WORLD. WHAT GSI DOES IS IT BRINGS TO U.S. 180 OF THE LARGEST RETAILERS THAT WANT TO COME ONLINE AND NEED TO COME ONLINE AND NEED HELP AS THEY TRY TO EXPAND THEIR BUSINESSES AND GO MULTI-CHANNEL AND EXPLORE THINGS LIKE MOBILE COMMERCE. SO WE THINK THE COMBINATION OF GSI AND EBAY MAKES A LOT OF SENSE.

PETE NAJARIAN: AND HOW SOON JOHN WOULD YOU SEE THIS COMPANY ACTUALLY JUST ADDING TO THE BOTTOM LINE. IS THAT SOMETHING ALMOST IMMEDIATE? IS THAT WHAT YOURE SAYING RIGHT NOW?

DONAHOE: GSI IS A VERY PROFITABLE BUSINESS TODAY AND WE LAYED OUT WE'RE ABOUT 900 MILLION OF REVENUE WE'LL HAVE THIS YEAR OR NEXT YEAR FROM GSI AND IN 2013 WE EXPECT BETWEEN 1 AND 1.3 BILLION DOLLARS OF REVENUE AND SOMEWHERE BETWEEN 19 TO 21 PERCENT MARGIN. SO ITS ALREADY A PROFITABLE BUSINESS THAT HAS REAL STRONG GROWTH CHARACTERISTICS.

LEE: JOHN, WHEN WE THINK ABOUT COMPETITORS TO EBAY OBVIOUSLY AMAZON AND THE PRIME SERVICE COMES TO MIND. BUT HOW DO YOU VIEW AT THIS POINT THE LIKES OF A VISA OR MASTERCARD CERTAINLY YOURE PARTNERING WITH THEM ON PAYPAL BUT AT THE SAME TIME YOUR LATEST EFFORTS FOR INSTANCE TO MOVE TO STORES AND BRING PAPAL AS A PAYMENT METHOD TO ACTUAL BRICKS AND MORTAR STORES SEEMS LIKE IT WOULD SORT OF CUT THEM OUT OF THE EQUATION.

DONAHOE: WELL, PAYPAL IS A WALLET.THE THING THAT PEOPLE NEED TO UNDERSTAND IS YOU CAN FUND YOUR PAYPAL ACCOUNT WITH ANY FINANCIAL INSTRUMENT.IF YOU WANT TO USE YOUR CREDIT CARD, YOUR VISA CARD OR YOUR BANK ACCOUNT OR A BALANCE OR A DEBIT CARD. SO WE'RE AGNOSTIC TO HOW A CONSUMER CHOOSES HOW TO FUND THEIR PAYPAL ACCOUNT. WHAT PAYPAL DOES IS IT ALLOWS YOU TO PAY IN THE SAFEST MOST CONVENIENT WAY WHERE YOU NEVER SHARE ANY OF THAT FINANCIAL INFORMATION. BE IT YOUR CREDIT CARD OR BANK STATEMENT. YOU WILL NEVER SHARE THAT WHETHER YOU'RE SHOPPING ONLINE OR ON A MOBILE DEVICE OR OVERTIME IN STORES.

LEE: SO IN TERMS OF THE EFFORT TO BRING PAY BALANCE TO THE BRICKS AND MORTAR, WHAT'S THE TIME LINE ON THAT?I KNOW YOU SPOKE ABOUT THAT AT A CONFERENCE JUST A MONTH AGO OR SO.

DONAHOE: WELL WE'RE FINDING MERCHANTS ARE LOOKING FOR PAYPAL TO COME INTO THE POINT OF SALE ENVIRONMENT. WE'RE WORKING WITH THE SMALL NUMBER OF MERCHANTS TO DEVELOP A PILOT PROGRAM WHERE PAYPAL WILL BE LIVE IN A FEW MERCHANT EXPERIENCES, AND A FEW MERCHANT LOCATIONS BY THE END OF THE YEARBUT WE THINK IT IS AN ENORMOUS POTENTIAL. AND WE'LL SEE. YOU KNOW IT IS STILL EARLY DAYS.

LEE: WHAT'S ENORMOUS?

DONAHOE: WELL JUST THINK ABOUT ALL THE PAYMENTS. YOU THINK OF ALL THE PAYMENTS THAT HAPPENS IN THE OFFLINE WORLD. WHATS HAPPENING HERE MELISSA THAT IS REALLY THE FUNDAMENTAL INFLECTION POINT THAT IS IMPACTING BOTH COMMERCE AND PAYMENTS IS A YEAR AGO WE WOULD HAVE THOUGHT ABOUT E-COMMERCE AS BEING SOMEWHERE BETWEEN 5% AND 6% OF TOTAL OFFLINE RETAIL AND OFFLINE RETAIL BEING AN ENORMOUS MARKET.THE SMART PHONE OR MOBILE DEVICE IS ABSOLUTELY BLURRING THAT BOUNDARY. SO TODAY YOU CAN WALK INTO ANY OFFLINE RETAILER WITH YOUR iPHONE AND USE EBAY APPLICATIONS LIKE RED LASER WHERE YOU CAN SCAN ANY ITEM IN THE STORE, SEE WHAT'S AVAILABLE ONLINE ACROSS THE WEB, AS WELL AS SEEING WHAT'S AVAILABLE IN LOCAL STORES AROUND YOU USING MYLOW WHICH IS ANOTHER COMPANY WE BOUGHT LAST YEAR. THE LINE BETWEEN ONLINE AND OFFLINE IS BLURRING AND THAT'S WHAT'S CAUSING RETAILERS IN THE OFFLINE WORLD TO EMBRACE PAYPAL AND LOOK FOR HELP ABOUT HOW THEY CAN GROW THEIR BUSINESSES. THAT'S WHY WE BUY GSI TODAY TO FURTHER THAT AIM.

LEE: JOHN, GREAT TO SEE YOU.

DONAHOE: THANKS SO MUCH.

LEE: JOHN DONAHOE, CEO OF EBAY.

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