UPDATE 4-EBay to cut jobs, sees revs at low end; shares fall

(Adds CEO, analyst, byline, SAN FRANCISCO to dateline)

By Alexandria Sage and Martinne Geller

SAN FRANCISCO/NEW YORK, Oct 6 (Reuters) - EBay Inc (EBAY.O: Quote, Profile, Research) said it will cut 10 percent of its work force and spend about $1.3 billion to buy online payment and classified companies to counter a slowdown in its main web auctions business.

Shares of eBay fell by as much as 12 percent on Monday, their lowest level in more than five years, after the company also said third-quarter revenue would hit the low end of its forecast. Shares clawed their way back to close at $17.89, down $1.05 or 5.5 percent, on the Nasdaq.

Investors are concerned the U.S. housing slump, higher fuel prices and a growing financial crisis are taking a greater toll on eBay's auctions.

Some also questioned one of eBay's purchases, Bill Me Later, which offers consumers deferred payments and financing promotions, as the credit crisis grips global markets.

The most significant layoffs in the San Jose, California-based company's history will affect about 1,000 employees and 600 temporary workers, across a variety of jobs and locations at eBay and PayPal, its online payments service.

The reduction is expected to incur restructuring charges of about $70 million to $80 million, mostly in the fourth quarter, but save $150 million annually thereafter.

Chief Executive John Donahoe told Reuters the company would reinvest resources into its auctions business, whether through lower prices, coupons or improving user experience. It would also plough the proceeds into higher-growth areas like PayPal and classifieds.