eBay to Cut 2,400 Jobs Ahead of PayPal Split

ebay phoneeBay is planning on axing 2,400 jobs, representing seven per cent of its workforce, in the current quarter as it prepares to spin off its PayPal unit into a separate business this year.

The news of the job losses came alongside the announcement of an agreement with activist investor Carl Icahn, a long-standing proponent of the spin-off, that investors would have a greater say over the PayPal unit following the split.

The separation and associated restructuring is expected to cost between $210m and $240m in Q1 (£138m to £158m), and between $350m and $400m over the entire year.

The company also said it was exploring a public offering or even sale of its enterprise unit, potentially laying the groundwork for the acquisition of eBay or PayPal by another company hoping to gain access to its eCommerce and online payments audience. Alibaba, Google and Amazon have all been cited by Wall Street analysts as possible future acquirers.

“We will also be exploring strategic options for eBay Enterprise including a sale or IPO,” said John Donahoe, president and CEO of eBay. “Enterprise is a good business but it has become clear that is has increasingly divergent opportunities and limited synergies with eBay. This move will help both businesses focus on their respective priorities moving forward.

“Looking ahead, we are clear on what we need to do at eBay and PayPal to deliver on our 2015 plans. I strongly believe that separation is the right path for our company, and we remain deeply committed to doing whats best for our business, shareholders and customers.”

The company reported Q4 earnings slightly ahead of Wall Streets expectations, but also warned that its outlook for Q1 2015 and the full financial year were lower than previously predicted.