Yahoo Europe quits online auctions

LONDON, May 23 (Reuters) - Yahoo Inc said on Thursday it is shutting down its primary European auction sites within the next six weeks, ceding a once-promising business to its dominant rival eBay.

The U.S. Internet firm said in departing the business it has struck a multi-year, multi-million euro marketing alliance with eBay.

Beginning later this week, eBay, the leading online auctioneer, will be featured on Yahoo's Web portal as the preferred site to trade new and used goods, the companies said.

Yahoo has been hit particularly hard by the slump in online advertising, forcing the company to re-evaluate all its business units, choosing to stick with those that will revive revenues.

Launched in Britain and Ireland in 1999, Yahoo's auction business failed to take hold in Europe. As a result, it will shut down its auction businesses in Spain, Italy, Germany, France and Britain and Ireland by mid-summer, the company said.

A Yahoo spokeswoman said that for the moment it will continue to operate its Danish auction site, adding that it too would be re-evaluated in the future to determine its business potential.

New advertising client

Yahoo said eBay will become one of its significant marketing partners in Europe, bringing a welcome injection of advertising revenues to the Web portal.

Yahoo Europe's managing director Mark Opzoomer said the decision was made at the end of the first quarter as it became apparent that it would be too costly to catch up with competitors.

"Our business would be better served focussing on the core retailing and commerce businesses,'' Opzoomer said, adding the move would not result in job losses.

Those employees overseeing the auction business will be re-deployed to work on Yahoo Shopping and Yahoo Travel, two e-commerce ventures to which the company has given priority to boost revenues as advertising continues to stagnate.

He added the move is consistent with a company-wide approach to focus on those business areas that will drive growth and profitability. Yahoo auctions in Asia and North America will not be affected, the company said.

The business didn't attract enough users in Europe to allow the company to begin charging them for auction listings, as it did in the United States.

Little impact on auction sector

Yahoo's departure isn't expected to have a noticeable impact on Europe's online auction sector. It trailed eBay, Amazon.com and European auctioneer QXL Ricardo in most countries in which it operates.

"This is not a deal that is going to shift the competitive landscape in Europe from our perspective,'' Ebay Europe managing director Michael Van Swaaij told Reuters on Thursday. "We were very much larger than they were.''

Van Swaaij said eBay was not interested in buying Yahoo auction assets, and said registered users of Yahoo auctions will not be compelled to switch to eBay.

Van Swaaij said the biggest advantage to eBay is the added marketing exposure it will get across Yahoo's portal. The auctioneer is concentrating on building its brand name in its newer, loss-making European markets of France and the Benelux region.

EBay is something of a dot-com rarity. It's European business as a whole is profitable on a fully accounted basis, including such charges as interest, tax and depreciation, Van Swaaij said, due to its profitable German and UK business units.

Van Swaaij said it grew its European revenues by 40 percent quarter-over-quarter in the first quarter of 2002, declining to specify figures. "This deal will accelerate that rowth even further,'' Swaaij said.