eBay announced that it will be laying off 2,400 workers as it prepares for the upcoming spinoff of PayPal during the latter part of the year and considers selling its eBay Enterprises unit. The 2,400 workers make up 7 percent of eBay's entire workforce.
The job cuts, which are scheduled to take place in the current quarter, are part of eBay's plan to reinvent itself as it looks to reinvigorate decreasing traffic, and sluggish growth due to increasing competition.
Not more than a year ago, eBay CEO John Donahoe said eBay's strength is in the combination of its three units: eBay Marketplaces, eBay Enterprises and PayPal. However, after increased prodding and pushing by activist investor Carl Icahn, eBay finally decided to separate from PayPal, which it purchased for $1.2 billion in 2002, citing a need to focus on its e-commerce businesses.
However, during its fourth-quarter earnings call with investors, Donahoe announced that it is considering selling eBay Enterprise, which focuses on providing e-commerce services to established brands such as RadioShack, Sony and iRobot. eBay purchased the enterprise unit for $2.4 billion two years ago.
"We will be exploring strategic options for eBay Enterprise, including a sale or IPO," said eBay in a statement. "Enterprise is a strong business and a leading partner for large retailers, managing mission critical components of their e-commerce initiatives. 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."
The consumer-facing eBay Marketplaces is eBay's main business, which Donahoe plans to focus on. eBay says it is now going after providing the needs of the "avid shopper," namely free shipping and in-store pick-up as opposed to same-day delivery.
Not much was disclosed about the job cuts, only that eBay will be spreading it across all three divisions, with a heavy tilt on eBay Marketplace.
"They'll be a little higher on the [eBay] marketplace side and a little bit lower on the PayPal side," eBay chief financial officer Bob Swan said.
eBay had a total revenue of $4.9 billion for the last quarter, up by 9 percent from the same period last year. Its marketplace division, however, saw a small 1 percent growth to $2.3 billion, compared to the 18 percent growth for PayPal, which reported $2.1 billion in revenue.
