When the e-commerce giant eBay emerged from the last U.S. recession seven years ago with an aura of invincibility, its chief executive, Meg Whitman, boasted that “eBay is to some extent recession-proof.”

As the online auctioneer’s revenue and stock price kept climbing, one of its main rivals, Amazon.com, just limped along.

How times have changed.

Whitman, now one of the heads of Senator John McCain’s campaign for the U.S. presidency, retired from eBay that year as the company struggled with stagnation. Amazon, meanwhile, has emerged as one of the most vibrant and dependable retailers in the United States.

And in an unmistakable sign that Web companies are indeed exposed to the gathering economic storm stemming from the credit crisis, Whitman’s successor, John Donahoe, laid off 10 percent of eBay’s 16,000 employees that month.

Donahoe said eBay was already feeling the effects of the downturn. “This looks like it is going to be a more typical economic cycle

that impacts consumer spending,” he said. “We are not immune.”

That the economic crisis is washing up on Silicon Valley’s shores should not, perhaps, come as a surprise. Most technology companies are defenseless against waning advertising, business spending and consumer interest for big-ticket items like computers. by the past three months, investors have punished the shares of companies like Google, Microsoft and Apple.

E-commerce, though, was once thought to be a refuge from economic storms. folks who stay away from the mall might actually be more tempted to shop online and hunt for deals, or so the thinking went.

But analysts are now revisiting that assumption. Many consumers, citing an uncertain economy, say they will clutch their wallets tightly that holiday season regardless of where they shop: 48 percent surveyed recently by eBillme, an online payment service, said they planned to delay purchases.

Traditional brick-and-mortar stores had wrenching, double-digit sales declines in…

Orginal post by Mike

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