AAA+++, Great Ebay Synergies, Tremendous PayPal Shareholder Value; Over Three Thousand Layoffs

Throughout the summer, one of the biggest activist stories, therefore one naturally involving Carl Ichan, was whether eBay (EBAY) would spin off PayPal. And sure enough, following months of promises and vows by John Donohoe that the company would never split, on September 30, around the time the market started hitting one record high after another, the company announced it would do precisely the opposite and all those activist demands would be fulfilled (and that John Donohoe would be handsomely compensated for his lies, especially since he would have no role in the resulting company).

So when the press release hit, some were wondering just what do the following buzzwords mean:

  • Maximizes strategic focus and flexibility for eBay and PayPal to capitalize on respective growth opportunities in highly competitive, rapidly changing global commerce and payments markets
  • Preserves eBay and PayPal relationships through arm’s length operating agreements
  • Provides shareholders with more targeted investment opportunities; best path to sustainable shareholder value
  • Followed by even more confusing corporate buzz speak:

    “eBay and PayPal are two great businesses with leading global positions in commerce and payments,” said eBay Inc. President and CEO John Donahoe. “For more than a decade eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value. However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges.

    “eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets,” Donahoe continued. “As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities. And we are confident following a thorough assessment of the relationships between eBay and PayPal that operating agreements can maintain synergies going forward. Our board and management team believe that putting eBay and PayPal on independent paths in 2015 is best for each business and will create additional value for our shareholders.”

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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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