From one into three.
EBay plans to further simply its organizational structure this year by either selling or splitting off its eBay Enterprise unit with an initial public offering, after having already announced last autumn its plan to jettison the PayPal unit.
EBay enterprise manages online sales 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,” eBay president and chief executive John Donahoe said in a press release. “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, as we create two independent world-class companies.”
A Reuters story says that potential buyers of eBay Enterprise include Salesforce.com, IBM, Demandware, Adobe Systems, and Bigcommerce. EBay’s latest streamlining measures could also make the core e-commerce company an attractive acquisition target.
The e-commerce giant announced in September that it planned to spin off PayPal in the second half of 2015. At the time, eBay said its board had concluded that a PayPal spinoff would create a sharper strategic focus. “The pace of industry change and innovation in commerce and payments requires maximum flexibility to stay competitive and drive global leadership,” the company said. In addition, eBay said, “the benefits of the existing relationships between eBay and PayPal will naturally decline over time and can be optimized in arm’s length operating agreements between the two entities.”
EBay’s actions reflect growing analyst concerns about its competitive viability within the e-commerce and payment platform markets. The company is also a target of activist investor Carl Icahn.
As part of the moves announced on Wednesday, eBay agreed to adopt a number of corporate governance changes championed by Icahn that would limit the PayPal board’s ability to prevent a takeover once it splits from eBay.
Any investor who owns 20% of PayPal will be able to call special meetings of shareholders, Icahn said in a separate statement that coincided with eBay’s release.
EBay said Thursday that fourth-quarter adjusted net income rose 4%, to $1.1 billion, or 90 cents a share, beating analysts’ consensus estimate by a penny.
“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,” Donahoe said in a release. “PayPal had another strong quarter, finishing an excellent year. EBay, while facing challenges, continues to be a great business and is focused on stabilizing performance and engaging its core customers.”
The San Jose, Calif. company also announced that it will cut its workforce across all its operations by roughly 7%, or about 2,400 positions.
EBay shares rose 7% by market close on Thursday.