EBay cuts 2,400 jobs ahead of PayPal spin off (+video)
Though eBay saw a fourth-quarter net income increase of 10 percent, the e-commerce company announced plans to cut 2,400 jobs across its marketplaces. EBay plans to spin off its payments business PayPal later this year.
EBay plans to cut 2,400 jobs, or 7 percent of its staff, in the first quarter to simplify its structure and boost profit ahead of a planned separation of its business.
The job cuts will fall across its marketplaces, PayPal and enterprise businesses.
They come as the e-commerce company reported Wednesday that its fourth-quarter net income rose 10 percent on continued strength of its PayPal payments business, which it expects to spin off in the second half of the year.
Other developments Wednesday: EBay said it may also spin off or sell its enterprise unit, which develops online shopping sites for brick-and-mortar retailers, and agreed to add an executive from activist investor Carl Icahn's firm to its board.
The string of changes comes after a tough 2014. A cyberattack compromised eBay users' passwords, email addresses and phone numbers, although no financial information was stolen. And a change by Google also made it harder for eBay results to come up during Web searches.
"We have some challenges," said CEO John Donahoe in a call with investors. "But overall, our focus and operating discipline delivered solid company performance in a year that quite frankly we're glad to see come to an end."
Still, the company said it faces a difficult first half of 2015 as well, as it continues to deal with the search engine changes and a stronger dollar. But Donohoe said results would start improving in the second half of the year.
The San Jose, California-based eBay has been under pressure to improve profitability from Icahn, one of its largest investors with a 3.7-percent stake in the company. He has pushed eBay to sell off PayPal, its best-performing unit.
PayPal services $1 of every $6 dollars spent online. It collects fees from over 162 million users who use the online service to send money to other users and pay for goods and services in more than 200 markets.
Now eBay is adding executive from Icahn's investment firm, Jonathan Christodoro, to its board, along with Wall Street executives Frank Yeary and Perry Traquina. That brings eBay's board to 15, including 13 independent directors.
For the October-to-December quarter, net income came to $936 million, or 75 cents per share, from $850 million, or 65 cents per share in same quarter the year before.
Earnings, adjusted for one-time gains and costs, came to 90 cents per share, beating the average estimate of analysts surveyed by Zacks Investment Research of 89 cents per share.
Revenue rose 9 percent, to $4.92 billion from $4.53 billion. Analysts expected $4.93 billion, according to Zacks.
For PayPal, total payment volume grew 24 percent in the fourth quarter and revenue rose to $2.2 billion, about 45 percent of total revenue for the quarter.
For the current quarter ending in March, eBay expects its per-share earnings to range from 68 cents to 71 cents and revenue of $4.35 billion to $4.45 billion.
For the year, eBay expects earnings of $3.05 to $3.15 per share, with revenue ranging from $18.6 billion to $19.1 billion.
Shares rose 33 cents to $53.71 in aftermarket trading. The stock has lost 1.4 percent over the past 12 months.