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Online retail giant eBay will slash 2,400 jobs — seven per cent of its workforce — in the current quarter as it restructures and prepares to spin off its PayPal finance unit.
California-based eBay unveiled the move yesterday as it announced its profit in the fourth quarter rose to USD 936 million on USD 4.9 billion in revenue. The job cuts will be across eBay’s three divisions: Marketplaces, Enterprise and PayPal.
The reorganization will return eBay to its roots with the “Marketplaces” division, which includes its auctions and online retail sales and accounted for nearly half its 2014 revenues.
“We will be simplifying organisational structures to focus the businesses and ensure that we are set up to compete and win,” said eBay, which also plans to explore options to separate the Enterprise division, which creates online sites for traditional retailers.
eBay announced plans last year to spin off PayPal amid pressure from activist shareholder Carl Icahn, and said the move would help the unit compete better in the fast-moving online payments segment.
In a further move to refocus, eBay said it would likely also shed its Enterprise division in a sale or public offering which creates an independent company.
“Enterprise is a strong business and a leading partner for large retailers, managing mission—critical components of their e—commerce initiatives,” a statement said.
“However, it has become clear that it has limited synergies with either business and a separation will allow both to focus exclusively on their core markets, as we create two independent world—class companies.”
eBay said it reached a “standstill agreement” with Icahn that calls for Icahn Capital executive Jonathan Christodoro to be named to eBay’s board.
Icahn said in a separate statement that Christodoro would “have the ability to transition to PayPal’s board once the spinoff occurs.”
The deal also includes limits on any “poison pill” for PayPal that could block a proposed buyout.
“PayPal’s charter documents will contain a number of corporate governance provisions that we suggested and which we believe will greatly enhance shareholder value at PayPal,” Icahn said.
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