eBay Inc is weighting the option to cut its workforce next year as the retailer figures out details around the upcoming spin-off of its PayPal payment unit, according to people with knowledge of the matter.
Around 3 000 employees, or nearly 10% of all workers, will part ways with the company, the Wall Street Journal said, citing people with information on the situation. The job cuts will be mainly focused in eBays core marketplace division.
The possible workforce trim may be taken as a part of eBays future plans once it becomes a stand-alone company. eBay.com and StubHub included, the marketplace unit may turn into target for a takeover as it is accumulating more profits compared to PayPal. However, eBays core unit is experiencing slower growth as it faces increased competition from rivals like Amazon.com and Alibaba Group Holding.
Should the layoff go through it would become eBays biggest decrease in workers since 2012, when the online retailer slashed around 235 workplaces in is PayPal unit. However, the current plan could be canceled as it is still work in progress, the journal said.
“We are focused on running the business and setting eBay and PayPal up for success as independent companies,” said Amanda Miller, a spokeswoman for eBay.
Analysts projected that a potential workforce trim will help eBay to become more attractive for buyout companies as it will reduce operating costs, which increased 14% during the first nine months of the year to $6.4 billion.
The split was first announced in September, when eBay said it would create two stand-alone companies by the end of the 2015. The move contrasts action taken by rivals Amazon.com and Apple Inc, who are both implementing payment systems to their core operations.
Splitting from its PayPal unit, eBay would have to be innovative in order to boost revenue. Individual website options for every customer is one of the possibilities that industry analysts have projected. Although the online retailer seems to be already on the task as it has been co-operating with brick-and-mortar stores, helping them boost sales.
eBay Inc gained 0.45% on Tuesday, but lost 0.23% on Wednesday and closed at $55.27, marking a one-year increase of 6.45%. The stock edged up 0.02% in pre-market trading on Thursday. The company is valued at $68.53 billion. According to the Financial Times, the 36 analysts offering 12-month price targets for eBay have a median target of $59.00, with a high estimate of $65.00 and a low estimate of $45.00. The median estimate represents a 6.75% increase from the last price of $55.27.
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