Global internet auction company, eBay, hasd announced that it would cut 1,000 jobs, as it plans to save $150 million a year due to declinming sales, even as it spent about $1.3 billion on three acquisitions - electronic payments business 'Bill Me Later', Danish web sites 'dba.dk' and 'bilbasen.dk'.

The job cuts amount to 10 per cent of eBay's work force and comes after an earlier round of 125 layoffs in North America and Europe, including 70 at its headquarters in San Jose, California.

The cutback would also affect "several hundred temporary workers and the reduction of open positions," eBay said in a statement. The layoff would result in a reorganisation charge of $70 million to $80 million, which will be accounted for in its fourth quarter.

CEO, Donahoe said, laying off employees was "never an easy decision to make," and added, "These reductions will help improve our operations and strengthen our ability to continue investing in growth."

eBay's acquisitions of 'Bill Me Later' come for $820 million in cash and $125 million in outstanding options and 'Dba.dk' along with 'bilbasen.dk' would cost the company $390 million in cash.

The company said that Bill Me Later will be merged into eBay's PayPal electronic payments division. The service uses "sophisticated underwriting techniques," which allow shoppers to be informed in seconds whether they've been approved for credit or not.

The eight-year old company, 'Bill Me Later' handles larger-ticket items than eBay's own PayPal system and accepts clients who have a good credit rating. It has more than 4 million people as its clients, who use its website and phone sales department as most of them are reluctant to part with their credit card or other bank information online. For this 'Bill Me Later' has a special agreement with more than 1,000 retailers.

While making a purchase, the client has to just click the Bill Me Later icon on the retailer's website or respond to certain security questions on the telephone and the purchase is accepted and the monthly bill can be paid by any mode except a credit card.

The acquisition of the Dutch classified-ad sites is an attempt to get into the European classified market and eBay has been acquiring classified web sites and also has a minority 25-per cent stake in 'Craigslist', the US leader in online classifieds. This year it tried to buy the remaining stake, which resulted in both companies suing each other.

eBay's acquisitions are also an attempt to change its conventional business in auctions and recoup its lost market, which has been taken by Amazon.com and a other smaller auction sites because of the high fees it charges, thereby hitting its revenue.

As people use the worldwide auction site to purchase everything from a house for $1.85, to Apple iPhones for more than $1,000, its number of users rose only 1.4 per cent to 84.5 million in the last quarter.

Last week, saw a surge in people using Ebay as one Joanne Smith bought a house in Saginaw, Michigan for a partly sum of $1.85.

Large companies like Southwest Airlines and Wal-Mart Stores offer the PayPal system of EBay, as a payment option on their web sites.