EBay’s Split With PayPal Could Cost Thousands of Jobs, Report Says

SAN JOSE, Calif. (San Jose Mercury News/TNS) -

EBay is reportedly considering laying off thousands of employees as it prepares to shed its huge online-payments division, PayPal.

Citing unidentified “people familiar with the company’s thinking,” The Wall Street Journal said that the layoffs could total at least 3,000 — about 10 percent of the San Jose, Calif., online retailing site’s workforce — when it splits apart next year.

“We don’t comment on rumors,” said eBay spokeswoman Amanda Miller. “We are focused on running the business and setting eBay and PayPal up for success as independent companies.”

She also declined to say how many employees eBay has in the Bay Area, noting only that as of the end of last year, “we employed approximately 33,500 people globally, including approximately 1,700 temporary employees,” with about 21,000 workers in the U.S.

Tech analyst Rob Enderle questioned why eBay would need to lay off anyone if it is jettisoning PayPal.

“I’m struggling with why they’d need to,” he said. “I understand layoffs after acquisitions, but a spin-out typically causes staff shortages in common services. If there is a layoff, tying it to the spin-off would seem to be disingenuous.”

However, when Palo Alto, Calif., tech giant Hewlett-Packard in October announced its intention to split into two roughly equal businesses, it said its workforce of about 300,000 — already being reduced by 45,000 positions — would undergo another 5,000 cuts.

Similarly, when security company Symantec, of Mountain View, Calif., announced a few days later that it would spin off its data-storage business, it said about 2,000 jobs — roughly 10 percent of its workforce — would get the ax as part of the move.

The Wall Street Journal said eBay’s job cuts mostly will be in its marketplace division, its primary business, which offers internet shopping sites, classified listings and advertising. As of the end of last year, that division boasted more than 128 million active users, meaning people who had bought or listed items for sale within the previous 12 months.

By whittling down eBay’s employee ranks, analysts told The Journal, it would reduce eBay’s expenses and make the company more attractive for someone to buy it. In addition, the newspaper noted, while eBay’s marketplace division is more profitable than PayPal, it is growing more slowly and faces tough competition from online giants Amazon and Alibaba.

Reducing costs “really makes sense,” said Portales Partners analyst Lily Peabody. Having experimented with services that aren’t internet-based, eBay is eager to get back to its core online business, she noted, adding that “if you are trying to position a company to be bought up, you want a lean company.”