EBay confirmed Wednesday a corporate shake-up that will split off PayPal and result in more than 2,000 layoffs, and the San Jose e-commerce company said it could split the company in three instead of just two.
EBay reported earnings Wednesday, and included in the report was news that it would slash 2,400 jobs, which it said was about 7 percent of its global workforce. Reports surfaced late last year that eBay would lay off more than 3,000 workers in conjunction with the split of PayPal, which the company announced in October.
Additionally, eBay said that it could spin off a third company, its enterprise-focused division dubbed eBay Enterprise, which managed e-commerce efforts for other businesses.
“Enterprise is a strong business and a leading partner for large retailers, managing mission critical components of their e-commerce initiatives,” the company said in its announcement. “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.”
Tech analyst Rob Enderle, who said last month that layoffs ahead of a split made little sense because “a spin-out typically causes staff shortages in common services,” said Wednesday that the move could signal that eBay is trying to sell the businesses after splitting them up.
“This may indicate that they’re looking for buyers to buy one or more of them and they want them to be as attractive as possible so they get the highest possible price,” Enderle said Wednesday. “The only reason I could see you would do this is you want to make it look like the property has a higher value than it currently does.”
EBay did specifically state that it would consider a sale or initial public offering for its eBay Enterprise unit.
EBay decided to split off PayPal after a protracted, public battle with Carl Icahn, and the activist investor appears to have won another round with the company. EBay said that Icahn, whom it described as “the company’s largest active shareholder,” would be allowed to place another hand-picked member on the company’s board — Icahn Capital executive Jonathan Christodoro.
EBay declared fourth-quarter profits of $936 million, or 75 cents a share, on revenues of $4.9 billion. Shares gained $1.86 to $55.24 in late trading, after losing 30 cents to $53.38 in the regular session.
“In a year of unexpected events and distractions, we ended 2014 with double-digit revenue growth, solid earnings growth and strong cash flow, reflecting the fundamental strengths of our company,” CEO John Donahoe said in a prepared statement.