So it’s official: Meg Whitman, CEO of eBay, will retire in March, making way for her former Bain Capital colleague John Donahoe, who currently runs eBay’s Marketplaces business. The news of Whitman’s desire to leave the San Jose, Calif.-based auctions giant was first reported by The Wall Street Journal.

The news is seen as a positive in some quarters, especially those who believe that Whitman has let one of the biggest web brands drift. Overpaying for Skype and other strategic bungles (China, for instance) have tarnished what for the first six years was a blemish-less tenure for Whitman. Of course, one can’t blame her for leaving – she’s worth $1.4 billion.

That said, she is leaving the company at a particularly perilous time. The stock is down 15 percent year-to-date, and there is still downward pressure on earnings and revenues. The biggest culprit: eBay’s core auction business, which is run by — you guessed it — CEO-in-waiting John Donahoe.

Which leads me to the big question: Why is Donahoe the right candidate for the job? And why are analysts in love with this guy, who is a management consultant with little knowledge of technology or the auctions business? All we have read are news reports that he has been anointed as the company’s heir apparent, but I have yet to hear him outline the big rescue for eBay.

And if you look at his track record since coming over from Bain (where he worked for Whitman), the best grade you could give him is a “B.” He has been with eBay for three years and in those three years, Marketplaces contribution to the overall eBay revenues has dropped from 70.8 percent from 76.9 percent. In a press release announcing his appointment, the company says:

In this role, Donahoe has been responsible for the growth of eBay and its other ecommerce businesses around the world, and during the time he has managed this business unit, both revenues and profits doubled.

We beg to differ. Look at this graph based on data provided by Wall Street analysts:

Furthermore, in 2005, Marketplaces accounted for $3.5 billion of eBay’s total $4.55 billion in revenue, roughly 76.9 percent. In 2006, the segment brought in $4.3 billion, or 72 percent of the company’s roughly $6 billion in overall sales. In 2007, at $5.2 billion, that number has dropped to 67.8 percent of total revenue of $7.67 billion. In short, despite today’s results, it is clear that the growth in the Marketplaces division has slowed, and in three years all that has happened is a marginal overhaul of the web site. The PayPal business, by comparison, is ramping up nicely.

Does Donahoe even understand the Skype and PayPal businesses? Will his tenure as head of Marketplaces be enough to prepare him to guide eBay in the future? I am told he is a great guy, a true people person, and that is good quality to have in a CEO. But it’s not enough.

The eBay Executive Musical Chairs

Meg Whitman will step down as President and CEO of eBay on March 31, 2008. She will remain on the company’s Board of Directors.

John Donahoe, President and CEO, will replace Whitman.

Rajiv Dutta, currently the President of PayPal, will replace Donahoe as President of eBay Marketplaces.

Scott Thompson, PayPal’s current Chief Technology Officer, will replace Dutta as President of PayPal.

Bill Cobb, President of eBay North America, is leaving the company.

Lorrie Norrington, currently President of eBay International, will become President of eBay Marketplaces Operations and replace Cobb.