EBay Announces Job Cuts, Icahn Pact With Earnings--Update

By Tess Stynes 

EBay Inc. announced plans to cut about 2,400 jobs, or about 7% of its workforce, as the e-commerce giant prepares to spin off its PayPal electronic-payments business later this year from marketplace.

The San Jose, Calif., company said the cuts will occur across eBay Marketplaces, PayPal and eBay Enterprise businesses. In December, The Wall Street Journal reported that the company was considering a plan.

The company announced the cuts with its fourth-quarter report, in which earnings rose 10% on continuing growth at its PayPal business.

EBay also said it would be exploring strategic options for eBay Enterprise, including a sale or initial public offering.

"Enterprise is a strong business," the company said, but "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."

The company also announced today that it has entered into a standstill agreement with investor Carl Icahn, the company's largest active shareholder. In addition to certain corporate governance provisions to be adopted by PayPal as an independent company at the time of its spin-off from eBay, the agreement also appointed Icahn Capital executive Jonathan Christodoro to eBay's current board.

Mr. Icahn, in a statement on its website, said the corporate governance provisions includes limits on any so-called poison pills and prevents a staggered board at PayPal. The provisions were aimed at giving shareholders a greater ability to weigh in on any offers made for the company.

"In the end, it should be the shareholders' decision. This fundamental belief was the underlying philosophy of many of the corporate governance principles for which we advocated at PayPal," Mr. Icahn said. "We applaud eBay's board for making this agreement possible."

Separately, eBay also announced the appointment of Wall Street executives Frank Yeary and Perry Traquina to its board. These appointments bring the total number of directors to 15, 13 of whom are independent.

Shares of eBay rose 2.7% in recent after-hours trading. Through Wednesday's close, the stock has risen nearly 16% from a two-year low in October.

With the breakup, eBay's traditional marketplace division will lose its fastest-growing division, one that was on pace to become the company's largest.

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