Technology|EBay to Cut 2,400 Jobs, and Weighs 2nd Spinoff
EBay to Cut 2,400 Jobs, and Weighs 2nd Spinoff
EBay, which already announced it would spin off PayPal, is now considering options for its warehouse and logistics division.CreditCreditMarcio Jose Sanchez/Associated Press
By Mike Isaac
EBay has made billions reinventing ways to sell items on the Internet. Now, in the face of declining growth, the company must reinvent itself once more.
Facing stiff competition and the declining growth of its auctions business, eBay announced a shake-up of the company on Wednesday, saying it planned to cut 2,400 positions, or 7 percent of its global work force.
"It's going to get a little bit worse before it gets better," said Bob Swan, chief financial officer of eBay, citing declines of traffic and repeat customers in the company's online auction business. "Our ecosystem has simply been disrupted."
The layoffs come in advance of a planned spinoff of PayPal, the company's payments arm, set for later this year.
EBay said it would also explore a sale or a possible initial public offering of eBay Enterprise, the company's warehouse and logistics unit for third-party eBay sellers.
It was an abrupt about-face from the vision of the company laid out by John Donahoe, the chief executive, no more than one year ago. Mr. Donahoe had said eBay's strength lay in the combined operations of its three divisions: Marketplaces, Enterprise and PayPal.
Referring to the enterprise division, the company said in a statement that it had become clear that it had "limited synergies with either business and a separation will allow both to focus exclusively on their core markets."
It was also a tacit admission of defeat in a continuing proxy fight against Carl C. Icahn, an activist investor and eBay's largest active shareholder, who last year urged the company to break itself into separate businesses. EBay said it had entered into a standstill agreement with Mr. Icahn. The company will add three new members to the company's board.
Mr. Donahoe, the most vocal opponent of Mr. Icahn's plan, said last year he would step down as soon as the spinoff of PayPal was complete.
The news overshadowed otherwise positive financial results on Wednesday. EBay reported earnings of $936 million in the last quarter, a 10 percent increase from the same period a year ago.
Overall revenue rose 9 percent, to $4.92 billion, nearly in line with analysts' estimates of $4.93 billion.
But other numbers foretell the reasoning behind the company's drastic restructuring. EBay's revenue growth in the company's marketplaces division rose just 1.3 percent, to $2.3 billion, signaling the slowest growth of its auction sites in years.
Mr. Swan said the company planned to reinvest in its marketing efforts to promote its auctions arm to encourage repeat business.
It will also heavily promote PayPal and Braintree, the payments start-up eBay acquired in 2013, as competition from rivals like Apple, Google and other start-ups begins to heat up.
"Not the worst performance, but a year we're glad to have behind us," Mr. Swan said.
A version of this article appears in print on , Section B, Page 4 of the New York edition with the headline: EBay to Cut 2,400 Jobs, and Weighs 2nd Spinoff. Order Reprints | Today's Paper | Subscribe