Billionaire Carl Icahn’s successful push to spin off PayPal is in full motion, and that means the imminent demise of eBay as we know it, news outlet Quartz said.
ebay has outlined its plans for what the company will look like post-separation. Clearly, PayPal is winning this breakup, the report said.
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While the split props up PayPal with $5 billion in cash and no debt, it leaves eBay saddled with $7.6 billion in debt (against $2 billion in net cash) and an online auction business that revolutionized e-commerce early on, but is now showing its age, the website said.
Ebay is laying off 7% of its workforce, with much of those cuts coming from its legacy marketplace business, the report said.
With traffic and sales slowing, eBay has tried to refashion its namesake auction site from an antiquated yard sale into an on-trend retailer. But it’s facing greater competition from the soon-to-IPO crafts marketplace Etsy and even old-school retailers like Walmart, Staples, and Home Depot, the website said,
Also not helping are the US dollar’s strength, which makes American goods more expensive to international buyers; security breaches; and problems with how eBay shows up in some search engines, the report said.
It’s unlikely any of the changes executives outlined so far to prop up eBay will be enough to save it. Even eBay’s CFO laid it on straight: “Things will get worse in the first half of 2015 before they get better, ” he told analysts, after eBay released fourth-quarter financial results, according to the website.
Meanwhile, Icahn, who directly or indirectly owns stakes in several oil and gas sector companies, said he is not bullish on oil, Benzinga.com said.
“I believe that oil will go lower and with Saudi Arabia sort of caught blind-siding the world and I don’t blame them, ” Icahn said in a recent interview with CNBC, according to the report.
“I think perhaps they made a smart decision for themselves. I think oil is very sensitive to very small difference in supply and demand. It has that roughly 93 million barrels a day that are utilized and consumed and supplied and when it goes over that and now it’s like a million and a half or so barrels changes, the supply is high, is higher by that amount, it wreaks havoc on the stock.
“But I don’t think that will continue, ” Icahn said, according to the website. “I think, the supply by definition almost has to dry up in the next few years because of depletion…and you have depletion of about 4 percent a year. So, to catch up with that you need almost one Saudi Arabia has to be discovered almost every two or three years the way I look at it. I look at it very simplistically like that”
When asked to reiterate whether he thinks that oil prices will continue to decline, Icahn replied, “I think in the near-term, it will continue to go down unless there’s some outside event which could be a crisis event, something happens to curtail the supply of oil, but if that doesn’t happen I think at least for the near-term oil prices will go lower”, according to Benzinga.