eBay, cutting 7 per cent of workforce, looks to spin-off Enterprise unit

A planned split of eBay's PayPal unit is also due this year

eBay will cut roughly 7 percent of its total workforce, or 2,400 workers, and is considering a sale or IPO of its Enterprise unit,.

The cuts are part of a plan to save more than $US300 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.

"eBay is a good business, but we have real challenges we're working our way through," said Bob Swan, chief financial officer at eBay, during a conference call held to discuss its latest financial results.

eBay's total sales for the last three months of 2014, were $4.9 billion, up 9 percent from the same period in 2013 and in-line with analyst expectations.

Revenue for the company's Marketplaces division, eBay's main consumer-facing business, grew by just 1 per cent compared to the previous year, to $US2.33 billion. eBay's net income was $US936 million, up 10 per cent.

The possible sale of eBay Enterprise, which lets brick and mortar retailers and brands sell products on the site, is a new option on the table for the company.

"It's clear the two businesses have divergent opportunities," eBay CEO, John Donahoe, said of that unit versus eBay Marketplaces, during the call. He declined to comment further.

The company didn't provide a detailed breakdown of the staff cuts, but said they will be heavier within the eBay Marketplace division and lighter on the PayPal side.

Meanwhile, eBay's plan to split PayPal is on track for the second half of 2015, Donahoe and Swan said. eBay acquired PayPay for $US1.5 billion in 2002 and expects to incur separation costs of around $US200 million through the split, as it separates shared data centers, infrastructure and IT related tasks.

eBay executives cited several other challenges for the company, including search. Because data around eBay's product listings is unstructured, and many of the listings turn over every 7 to 10 days, items do not fare well in Google's search results, they said. The company is trying to fix this by reassembling the data in its product catalogue.

"SEO is a modest part of our traffic, but an important source of new buyers for us," Donahoe said.

Separately, while eBay has made it easier for sellers to have their listings appear globally, that has resulted in some reduced selling prices in auctions, said Swan. The sale price for auctions tends to be lower in emerging markets, and on mobile devices too, he said.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Zach Miners

IDG News Service
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