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eBay cutting jobs ahead of PayPal split

The e-commerce company will cut 2,400 postions this quarter and is mulling selling off its eBay Enterprise unit ahead of the spin out of its PayPal payments service.

Donna Tam Staff Writer / News
Donna Tam covers Amazon and other fun stuff for CNET News. She is a San Francisco native who enjoys feasting, merrymaking, checking her Gmail and reading her Kindle.
Donna Tam
2 min read

eBay, getting ready to separate from its PayPal payments service, will cut about 7 percent of its workforce this quarter, the company said Wednesday as it delivered its fourth-quarter earnings report.

About 2,400 jobs will be eliminated in the first quarter from its e-commerce units, eBay Marketplaces and eBay Enterprise, and PayPal. eBay is also consider selling eBay Enterprise or taking the business unit public. The enterprise group provides e-commerce services for retailers and brands, including RadioShack, Sony and iRobot.

"It has become clear that [eBay Enterprise] 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," eBay said in a statement. "Looking forward to 2015, we will be simplifying organizational structures to focus the businesses and ensure that we are set up to compete and win."

eBay, which bought PayPal for $1.5 billion in 2002, announced in September that it's spinning off PayPal so the two units can run as individual companies. The split is planned for the second half of the year. The move is meant to give both more flexibility to focus on their respective businesses. For eBay, that means increased attention on its retail and marketplace services since PayPal has been the fastest-growing part of its business.

PayPal's revenue rose 18 percent to $2.16 billion in the fourth quarter. eBay's marketplace unit increased just 1 percent to $2.33 billion.

eBay is spreading the job cuts among all its departments, Chief Financial Officer Bob Swan said during the company's earnings call.

"They'll be a little higher on the [eBay] marketplace side and a little bit lower on the PayPal side," he said, depending on what each company plans to focus on.

CEO John Donahoe said the PayPal will be more focused on innovation, while eBay will focus on its core business by shutting down some initiatives.

He said eBay will focus on pleasing "the avid shopper" instead of the "convenience consumer." This means more focus on free shipping and in-store pick up, but less on same-day delivery.

eBay experimented with its eBay Now same-day delivery service for roughly two years before integrating the features into its site. The service let customers order from a pool of eBay brick-and-mortar partners.

Updated, 3:20 p.m. PT: Added more details from the earnings call.