EBay said today that it would cut about seven percent of its workforce globally in the first quarter as it looks to reduce costs ahead of its planned spinoff of PayPal. The company also said it would explore a sale or IPO for its eBay Enterprise unit, which provides online and brick and mortar retailers with software tools and warehousing and logistics services.
The job cuts are expected to affect 2,400 positions across all divisions of the company, including PayPal, the company said. eBay’s stock was trading up nearly 4 percent in after-hours trading.
The news overshadowed eBay’s fourth-quarter results, which were basically in line with analyst expectations. But the company released disappointing guidance for the current quarter. EBay said it was expecting first-quarter revenue to be in the range of $4.4 billion, compared with analyst estimates with a midpoint of $4.74 billion.
EBay also announced a deal with shareholder Carl Icahn to name Icahn crony Jonathan Christodoro to eBay’s board. The so-called “standstill agreement” was reached to keep Icahn from agitating for a bigger stake or a hostile takeover of the company. Upon eBay’s split with PayPal — which Icahn had pushed for and which is expected to happen later this year — Icahn can determine whether Christodoro will remain on eBay’s board or take a seat on PayPal’s instead. If it wasn’t already clear, Icahn won this fight.
On a conference call with analysts, CEO John Donahoe once again focused on the challenges the company faced in 2014, which negatively impacted fourth-quarter results. The company reset all of its customers’ passwords after a security breach and also got penalized from Google, which resulted in a chunk of eBay pages being knocked out of some search results. Sales in eBay’s marketplace division were hurt by a strong dollar, which raised the prices of goods for international buyers.
Taken together, those events “overwhelmed the progress we were making,” Donahoe said, and will likely affect results through next quarter. EBay Marketplaces revenue grew just one percent year-over-year to $2.33 billion. Total revenue for eBay grew nine percent year-over-year to $4.92 billion, boosted by 18 percent growth in PayPal. PayPal revenue was $2.2 billion for the quarter, marking the first time it has crossed the $2 billion threshold.
Donahoe and CFO Bob Swan said the company has been ramping up marketing and working on search engine optimization fixes to combat the challenges its shopping sites face.
Donahoe said eBay also plans to find a new home for its Enterprise unit, either through a sale or IPO, to help refocus on the core Marketplaces businesses. In an interview with Re/code on Wednesday night, Donahoe said eBay would take its Enterprise division down the path of an IPO unless acquirers step in.
“If a strategic or financial acquirer emerges, we’ll compare their offer to what we’d get from an IPO,” he said.
EBay Enterprise revenue grew nine percent year-over-year in the fourth quarter, from $407 million to $443 million. The unit includes its Magento division, which makes software tools that power online retail sites for midsize brands. EBay Enterprise also offers services such as warehousing as well as fulfillment for brick-and-mortar stores that want to offer ship-from-store or in-store pickup capabilities.
This article originally appeared on Recode.net.
