LIVE: EBay Stock Surges As Carl Icahn Says He Wants To Break Up The Company

EBay CEO John DonahoeBloombergCEO John Donahoe

eBay reported its Q4 2013 earnings and the stock went up 9% immediately in after-hours trading.

The company is proposing a $US5 billion stock buyback, and has received a proposal from activist billionaire investor Carl Icahn to split off PayPal into a separate unit. Icahn also wants two of his people added to the board of directors.

eBay says it has previously considered and rejected this idea, and that Icahn has a 0.82% stake in the company.

Here are the results:

  • Revenues: $US4.5 billion, up 13%.
  • Marketplaces revenue: $US2.3 billion.
  • EPS: 81 cents – a beat.
  • Net income: $US850 million.

See the full numbers below or read the official press release. Separately, here’s the investor slideshow.

Here is what the company says about the Icahn proposal:

Proposal from Carl Icahn — The company also announced today that it has received a notice from Carl Icahn indicating that he has nominated two of his employees to its Board of Directors and submitted a non-binding proposal for a spinoff of its PayPal business into a separate company. The notice stated that companies controlled by Mr. Icahn had, earlier this month, acquired shares and derivative securities that give him an economic interest of approximately 0.82% in the company.

eBay welcomes the opportunity to listen to the perspective of all of its shareholders, including Mr. Icahn. His Board nominations will be passed on to the Board’s Corporate Governance and Nominating Committee, which will consider them in the ordinary course of business. We would note that eBay has a world-class board of directors with directors who have significant experience in technology and financial services.

Regarding Mr. Icahn’s separation proposal, eBay’s Board of Directors routinely assesses the company’s strategic direction and has explored in depth a spinoff or separation of PayPal. eBay’s Board of Directors has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximise shareholder value. As part of eBay Inc., PayPal is able to leverage the company’s technology capabilities, commerce platforms and relationships with retailers, brands and large merchants worldwide. Payment is part of commerce, and as part of eBay, PayPal drives commerce innovation in payments at global scale, creating value for consumers, merchants and shareholders.

eBay Inc.’s Board of Directors and management remain focused on delivering sustainable results and driving long-term value for all shareholders.

The company will provide additional perspective during and after its quarterly earnings call scheduled for Wednesday Jan. 22nd at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time.

PayPal, frankly, is the revenue engine driving eBay right now: Sales went up 19% in both the quarter and the full year, to $US6.6 billion for all of 2013. The unit gained 5.2 million new active accounts in Q4 to end the year with 143 million, up 16%.

eBay’s Q4 and full-year results:

This pretty picture makes that easier to understand:

This is a breakout of the PayPal/payments’ revenue segment:

And the guidance:

  • Q1 2014: net revenues of $US4,150 – $US4,250 million with non-GAAP EPS of $US0.65 – $US0.67.
  • Full year 2014: net revenues of $US18,000 – $US18,500 million non-GAAP EPS of $US2.95 – $US3.00.
  • Full year 2015: net revenues of $US20,500 – $US21,500 million.

Analysts were expecting eBay to post a 16.1 per cent profit increase from Q4 2013, with decelerating growth from its “Marketplaces” (auction) segment and increasing revenue growth from PayPal. The PayPal numbers are particularly crucial because eBay is late to the mobile payments game. It recently acquired Braintree for $US800 million and is in the process of acquiring StackMob.

Investors are watching for a new sales platform for brands that want to sell directly to consumers, according to the Wall Street Journal:

CEO John Donahoe is looking to expand eBay’s marketplaces segment, the namesake business through which customers buy and sell items online. Watch for any announcements on new initiatives. Earlier this month, an analyst said the company was working on a new marketplace site, called “The Plaza,” for brands to sell directly to consumers.

Here is what analysts expected prior to the call from the top and bottom lines, per Yahoo Finance:

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