EBay Mulling Thousands Of Job Cuts Early Next Year--Sources

By Greg Bensinger 

EBay Inc. is considering a plan to eliminate thousands of jobs early next year as it prepares to separate its PayPal payments unit, according to people familiar with the company's thinking.

The cuts are expected to primarily affect workers in eBay's core marketplace division, these people said. One said eBay has discussed trimming at least 3,000 jobs, or 10% of its total workforce.

The planned layoffs appear to be part of eBay's preparations to be a stand-alone company, and a potentially attractive takeover target. The marketplace division, which includes eBay.com and StubHub, is more profitable than PayPal but is growing more slowly and faces rising threats from Amazon.com Inc. and Alibaba Group Holding Ltd., among others.

Analysts have said an independent eBay would be a candidate for a buyout, and job cuts would help lower operating costs, a key metric for buyout firms. Operating costs companywide jumped 14% in this year's first nine months to $6.4 billion, which is roughly half of total revenue.

A spokesman declined to comment on the company's plans for job cuts. EBay has said it intends to be an independent company.

The spinoff plan stands in contrast to rivals Amazon and Apple Inc., which are integrating payment services into their operations. Apple in October began its Apple Pay service, allowing iPhone users to tap their handset at registers to buy merchandise. Amazon is rolling out a mobile wallet and credit-card-swiping devices for brick-and-mortar merchants.

EBay said in September that it would spin off its PayPal unit by the end of next year, creating two publicly traded companies. EBay had 33,500 employees at the end of 2013, split about evenly between PayPal and the marketplace unit, which includes eBay's smaller enterprise unit. The company is still evaluating its options and could alter the job-cut plan, the people familiar with eBay's thinking cautioned.

The marketplace division posted a 6% rise in revenue to $2.16 billion in this year's third quarter, while revenue at PayPal jumped 20%, to $1.95 billion.

In an interview with The Wall Street Journal last month, marketplace division President Devin Wenig, who will become chief executive of eBay following the split, said, "There will be changes; there will be significant changes." He declined to elaborate.

The potential job cuts would be the largest at eBay in many years. Earlier this year, eBay trimmed a few dozen employees in its Magento software unit and about 100 workers at ticket-seller StubHub, according to reports. The last major job cuts were in 2012 when PayPal pared 2.5% of its staff, or about 325 full-time positions.

EBay is controlling costs in other ways. It once planned to expand its eBay Now one-hour delivery service to 25 markets by the end of this year. But it has been held at five markets as eBay works on its economics.

Without the faster-growing PayPal unit, the independent eBay also will need new ways to boost revenue. Industry analysts expect eBay to introduce more customer personalization options on its site. The company also has been working with brick-and-mortar retailers to help them sell merchandise in new ways, such as installing interactive screens in changing rooms.

Write to Greg Bensinger at [e-mail]

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