EBay Corp announced on Wednesday it will reduce its workforce by 2 400 employees as the e-commerce giant makes arrangements to split from its enterprise division.
The job cuts will represents around 7% of eBays total employees and will be primarily focused on eBays core marketplace unit. The layoffs would be completed by the end of the first quarter, the company said.
EBay also announced it had entered into a standstill agreement with activist investor Carl Icahn, who has pressured the company into splitting with its PayPal unit.
Now the company consider a possible sale or a spin-off for its enterprise division. EBay reinforced the division in 2011 with the acquisition of GSI Commerce, outlining efforts to increase revenue. The division specializes in allowing brick-and-mortar stores to sell their merchandise online. Once an item is purchased the customer can come in the store and pick it up or benefit from the store-to-home delivery service provided by eBays division.
The company was looking to partner-up via its eBay Enterprise with retailers, including RadioShack, Sony and iRobot, in order to compete better with Amazon.
In late September the e-commerce giant announced it would split its stronger PayPal division later this year. Mr. Icahn and other analysts have said that once split PayPal would make an appealing takeover target.
EBay also announced it will increase its board member by three, one of which will be Jonathan Christodoro, a representative of Carl Icahn. However, Mr. Christodoro will be later relocated to PayPals board, once the split is completed.
The company agreed to several compromises related to PayPals stand alone status proposed by Mr. Icahn. In line with the agreements the payment processor will not be able to appoint any new board members and will have less power to fend off takeovers.
“All the big players have set their eyes on PayPal,” said one banker in San Francisco, cited by the Financial Times. “Now there could be a race to try to buy it.”
Technology giants, including Google, Amazon and Facebook, have been under pressure to take action since Apple launched its mobile payment service.
eBay Inc lost 0.56% on Wednesday and closed at $53.38 on the NASDAQ, marking a one-year decrease of 1.42%. The company is valued at $66.69 billion. On Thursday the stock edged up 3.48% to $55.24 at 10:02 GMT.
According to CNN Money, The 37 analysts offering 12-month price forecasts for eBay have a median target of $58.00, with a high estimate of $69.00 and a low estimate of $45.00. The median estimate represents a 8.65% increase from the last close price.
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