EBay CFO: Using Offshore Cash For Acquisitions 'A Priority'

EBay Inc. (EBAY) will continue to use its offshore cash to make strategic acquisitions that enable the company to grow, the e-commerce giant's chief financial officer said Tuesday.

With most of the company's roughly $3 billion in cash sitting offshore, CFO Bob Swan said eBay would continue to focus on making strategic acquisitions, not unlike its recent offer to buy all the outstanding shares of South Korean e-commerce group Gmarket Inc. (GMKT).

"Continuing to use offshore cash to grow through acquisitions will be a priority," Swan said during a presentation at the J.P. Morgan Global Technology, Media and Telecom Conference in Boston.

EBay last month said it would attempt to buy all 50.3 million shares of Gmarket, which is based in Seoul but trades on the Nasdaq Stock Market. Executives said they had secured deals to buy 67% of the outstanding shares.

The deal will combine South Korea's two largest e-commerce Web sites by subscribers and revenue.

Swan also said the company would look at buying back stock on an opportunistic basis, although he recognized that doing so would force the company to take a tax hit to repatriate offshore cash.

Shares in eBay have fallen 43% over the past 12 months as the company struggles to transform its marketplace business in the face of intensifying competition from rivals like Amazon.com Inc. (AMZN), which has benefited as online shoppers have shifted toward fixed-price sales.

Swan said eBay continues to generate "quite a bit of cash," a significant portion of which is generated and is sitting offshore. He added that the company's general philosophy was that it should maintain "relatively conservative" cash balances.

Swan also said the Obama administration's proposed corporate tax policies wouldn't likely have a dramatic impact on eBay's effective tax rate and cash flows.

-By Scott Morrison, Dow Jones Newswires; 415-765-6118; [e-mail]