eBay set to cut work force by 7% in first quarter of 2015

Global commerce platform and payments leader eBay has announced that they plan to reduce their workforce globally by approximately 2,400 positions which represents about 7% of its total workforce across eBay Marketplaces, PayPal, and eBay Enterprise during the first quarter.

The cuts are part of a plan to save more than US$300 million across the company this year as it battles sluggish traffic, low-selling items, and increased competition in e-commerce. EBay is also planning to spin off its PayPal unit into a separate company this year.

The announcement was made as the company also reported its Fourth Quarter and Full Year Results. The company reported that revenue for the fourth quarter ended December 31, 2014 increased by 9% to $4.9 billion, compared to the same period in 2013.

In a statement posted on eBay’s website, eBay said that they will also be exploring strategic options for eBay Enterprise, including a sale or IPO.

“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, ” read the Statement

“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,” said John Donahoe, president and CEO of eBay Inc. “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. Looking ahead, our plans are on track to separate eBay and PayPal into independent companies in the second half of 2015, and we are confident this is the right strategic path for each business.”

The company also announced today that it has entered into a standstill agreement with investor Carl Icahn, the company’s largest active shareholder. In addition to certain corporate governance provisions to be adopted by PayPal as an independent company at the time of its spin-off from eBay Inc., the agreement also appoints Icahn Capital executive Jonathan Christodoro to eBay Inc.’s current Board of Directors. On September 30, 2014, eBay Inc. announced that its board of directors had approved a plan to separate the company’s eBay and PayPal businesses into two independent publicly traded companies in 2015, subject to customary conditions. The agreement with Mr. Icahn allows him to determine which board Mr. Christodoro will serve on at the time of separation.

In a separate press release today, the company also announced the appointment of seasoned Wall Street executives Frank Yeary and Perry Traquina to its board of directors. These appointments bring the total number of directors to 15, 13 of whom are independent.