Boston, MA 02/26/2014 (wallstreetpr) – eBay Inc (NASDAQ:EBAY) could end up experiencing the shakeup that Apple Inc (NASDAQ:AAPL) tested when activist investor Carl Icahn felt that Apple Inc shareholders were not getting what they deserved. The billionaire investor has opened a war of words with EBAY management, particularly singling out two directors and the company’s chief. And all this has to do with fighting to maximize shareholder value, or so it seems.
The billionaire is pushing the online marketplace company to spin off its lucrative Internet payment service, PayPal. This online payment business is no longer just a promising business as it used to be viewed what it was acquired in 2002. Today it contributes a significant percentage of EBAY’s total revenue.
With that in mind, Mr. Icahn wants the business separated from the money company, hoping that doing so would maximize shareholder value. But eBay Inc (NASDAQ:EBAY) management has said no.
Separating PayPal for value sake
eBay Inc (NASDAQ:EBAY) acquired PayPal for $1.3 billion towards the end of 2002. Tesla Motors Inc (NASDAQ:TSLA) chief executive Elon Musk was among the founders of the online payment business. The business has been on a rapid growth, fueled by the robust outsourcing and online businesses around the world. The service is even of late getting into land-based stores.
This fast-growing online payment business brought in revenue of $1.84 billion in the fourth quarter, an amount that account for about 41 percent of total revenue that eBay Inc (NASDAQ:EBAY) realized for the quarter. In fact, the best way to put it is that PayPal is growing fast than the online marketplace that has long been the backbone of EBAY.
Conflicting Interests
In refusing to let go of PayPal in a spin off, Mr. Icahn is reading opaqueness in the board of eBay Inc (NASDAQ:EBAY). He recently wrote to fellow shareholders in the company that the disregard for accountability seen at EBAY is the most blatant any investor can expect. By that he meant to raise concerns about governance lapse in the company.
Mr. has taken aim at board members Scott Cook, Marc Andreessen and chief executive John Donahoe. He accuses each of specific ills, but joins the board members as people causing conflict of interest at eBay Inc (NASDAQ:EBAY). Mr. Icahn claims that Mr. Cook founded a company called Intuit which is a direct competitor of PayPal. And Mr. Andreessen’s case revolves around lack of loyalty to EBAY given that has financial interest in two former EBAY subsidiaries. And then the CEO Donahoe is joined in for failing to wake up and smell the coffee.
But in all this, eBay Inc (NASDAQ:EBAY) has responded in strong defense of its board members and CEO. So then, this can only mean that more exchanges could be coming as long as differences in opinions about how to deal with PayPal remain.
