eBay To Spin Off PayPal

lol capitalism. by Anonymous Coward · 2014-09-30 05:37 · Score: 0, Flamebait

And nothing of value was either gained, but some wealth was moved upward in the process.

(Do capitalists even realise that wealth creation is merely the application of mind and body to the building of products and the provision of services, and that capital itself creates nothing?)

Re:lol capitalism. by cayenne8 · 2014-09-30 05:40 · Score: 1

So..why would it be a good thing to separate the companies and make them "easier to acquire"?
Seems like not being open to a hostile buyout would be a good thing?

--
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Re:lol capitalism. by sunking2 · 2014-09-30 05:44 · Score: 1

Because being acquired makes you money? Just tossing it out there.
Re:lol capitalism. by Ctrl-Z · 2014-09-30 05:50 · Score: 1

Who says it must be hostile?

--
www.timcoleman.com is a total waste of your time. Never go there.
Re:lol capitalism. by Noah+Haders · 2014-09-30 05:51 · Score: 4, Interesting

are you familiar with the lone ninja paradox? the lone ninja is a force of silent death that cannot be stopped. He can climb buildings, sneak past guards, assassinate emperors, and accomplish any number of impossible tasks. But when you gather a bunch of ninjas into a large clan, they are essentially incompetent and will be defeated by pretty much any enemy, especially a lone ninja.

hence the comment in the first sentence of the summary, "too big to compete effectively".
Re:lol capitalism. by alexander_686 · 2014-09-30 05:52 · Score: 4, Interesting

First, it has nothing to do with Alibaba's IPO and everything to do with Apple's new one touch payment.
Second, being opposed to hostile takeover is a bad thing. I will put it simply, if you owned some stock of eBay, why would you want to discourage somebody offering you a price that is higher than it is trading for today? I mean, yes, one could insert poison pills and stuff to damage and tarnish your stock, decreasing it's value so people would stay away, but once again why?
Most of the time it is managers, not the owners, who are opposed to hostile takeover. They face a bum choice. They could work hard to keep the stock price. Or they could slack off, be bought up, and then be fired. Of course they have pay packages in the millions so I don't feel too sorry for them.
Re: lol capitalism. by Anonymous Coward · 2014-09-30 06:05 · Score: 1

It's not that simple. Arbitrage generates huge opportunities to profit in the financial services sector. Fees for analysis, bond offerings, loan generation for the leveraged buyout, stock offerings, etc., stuff big pockets on Wall Street, not to mention all the market trading opportunities that emerge from the mere existence of these tradable financial instruments. And lest we not forget, there are always the ensuing opportunities to restructure, down size and increase productivity by outsourcing and cutting payroll. The Gordon Geckos and Timothy Geitners of the world, alike, salivate over the magnitude of such machinations, and it's a spectator sport too! (Even NPR seems obligated to report the daily state-of-Dow Jones Indutrial Composite Weighted Index Average, as if it reflects some measure of reality.)
Re: lol capitalism. by alexander_686 · 2014-09-30 06:32 · Score: 1

I don't think you mean "Arbitrage" – I think you mean Mergers and Acquisitions. There was something called "Mergers Arbitrage" back in the 80s, but mostly that was speculators hiding behind the boring name of "Arbitrage".
And no, your logic does not make sense. The only reasons as a stockholder that I would agree to a merger or acquisition is because it would make money for myself. Do other parties make money off the deals – yes. Do they take too large of a cut of the profits? O.k. But your logic is arguing that newspapers hire journalist to burn down factories so they can sell stories about fires. I mean this has happened in the past but it is now how newspapers survive day to day.
Re:lol capitalism. by ShanghaiBill · 2014-09-30 07:12 · Score: 1

Seems like not being open to a hostile buyout would be a good thing?
Good for whom? Hostile buyouts are almost always bad for management, sometimes bad for customers, but almost always very good for shareholders. For a hostile buyout to be successful, they need to offer considerably more than most people think the company is worth. Otherwise, the shareholders will not approve of the deal in the face of management opposition.
If directors take action to ward off hostile takeovers, they are putting their own personal interests above the interests of the shareholders they have a fiduciary duty to represent. In my opinion, these actions should be illegal. In some countries they are.
Re:lol capitalism. by tomhath · 2014-09-30 08:29 · Score: 1

A functioning organization/infrastructure that provides a useful service is something of value. You fail at economics.
Re: lol capitalism. by Anonymous Coward · 2014-09-30 10:32 · Score: 0

I don't think you mean "Arbitrage" – I think you mean Mergers and Acquisitions. There was something called "Mergers Arbitrage" back in the 80s, but mostly that was speculators hiding behind the boring name of "Arbitrage".
And no, your logic does not make sense. The only reasons as a stockholder that I would agree to a merger or acquisition is because it would make money for myself. Do other parties make money off the deals – yes. Do they take too large of a cut of the profits? O.k. But your logic is arguing that newspapers hire journalist to burn down factories so they can sell stories about fires. I mean this has happened in the past but it is now how newspapers survive day to day.
What you agree to as a stockholder doesn't mean jack. Capitalism is not democracy. The majority of the shares of many companies are held by people who would benefit from merger and acquisitions, regardless of what it does to the company, the employees, the customers or the economy. And they vote accordingly. Your paltry little 100 shares or so don't count for spit.
Re:lol capitalism. by swillden · 2014-09-30 11:51 · Score: 1

First, it has nothing to do with Alibaba's IPO and everything to do with Apple's new one touch payment.
How so?

--
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
Re:lol capitalism. by zephvark · 2014-09-30 14:02 · Score: 1

Second, being opposed to hostile takeover is a bad thing. I will put it simply, if you owned some stock of eBay, why would you want to discourage somebody offering you a price that is higher than it is trading for today?
It is possible you are not familiar with turn-and-burn operations. A company I worked for once was acquired in a hostile takeover. Everyone was fired, most of the products were scrapped, the buildings and equipment went... all that was left was a quick profit for the takeover company and a few bits of software that could never be updated to remarket.
You are horribly ignorant or deluded if you are arguing that hostile takeovers are a good thing.
Re:lol capitalism. by alexander_686 · 2014-09-30 14:49 · Score: 1

Anecdotal evidence. You have 1 example. Here are my 3.
Warren Buffet's hostile bid on fabric manufacturer Berkshire Hathaway
Steve Jobs vulture bid on hardware manufacturer Pixar
KKR's hostile bid for RJR Nabisco, where executive where lining their pockets at the expense of shareholders.
Which takes us to being a Monday morning quarterback or a armchair general. Not know the particulars of your experience, most of the “striping” operations are over zombie companies that are slowly dying – worth more dead than alive. Isn't it better to do something with them before they are completely run into the ground?
And yes, like you, I have been though one of these as a employee.
Re:lol capitalism. by alexander_686 · 2014-09-30 14:58 · Score: 1

Look at the PayPal's press from 15 years ago. They were going to revolutionize the payment industry – distributing old players. Read BitCoin's press from last year and you get the idea.
And then for the next 10 years . nothing. Don't get me wrong, it is a nice niche player but it has not innovated like Square.
And now comes Apple. One Touch was what PayPal was promising 15 years ago. I suspect this is just the first narrow wedge. Apple will expand its payment services.
So how is PayPal going to get its grove back? Shuffling the boxes on a company's org chart is probably just step one.
Re:lol capitalism. by jkflying · 2014-09-30 17:07 · Score: 1

Most of what PayPal is used for doesn't have any physical customer interaction. For example, it's one of the few payment services I trust enough to make payments to small manufacturers in China. For that kind of transaction, One Touch is useless unless 1) I'm willing to pay several hundred dollars in down-payment on an Apple device, 2) fly out to China each time I need to pay for something. While One Touch might work for your local shopping mall, IMO Apple is getting into that market just as the market is trending towards the way Paypal operates, with purchases made online.

--
Help I am stuck in a signature factory!
Re:lol capitalism. by swillden · 2014-09-30 17:52 · Score: 1

Apple Pay isn't new. It's just another spin on what Google and ISIS (now SoftCard) did before it. The reason PayPal didn't change the world was because the financial industry is owned by the banks, and they don't allow it to be changed except in the ways they want. Many have attempted to bypass them, or undermine them, and none have succeeded. PayPal didn't do it in the past and isn't going to in the future. Neither is Apple.

--
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
Re:lol capitalism. by alexander_686 · 2014-10-01 00:00 · Score: 1

What you say is true - for today. Bu t I still think it is the thin wedge that Apple will use to get into the payment transactions. Apple is not going to stop where it is at. But right now PayPal is kind of dead in the water. What is the last big thing that they did. While not a direct move on PayPal this is a bucket of cold water on PayPal's face, telling them to wake up and start moving.
Re:lol capitalism. by zephvark · 2014-10-05 19:01 · Score: 1

In response to one anecdote, you post a few more? That's not data. If you want to get smart about it, get smart about it. Show me the evidence.
Re:lol capitalism. by alexander_686 · 2014-10-06 01:40 · Score: 1

Sure. Can you be a bit more specific on what you are looking for? The M&A academic field is huge. Do you want to talk about 1980s style turn and burn? Those where abusive thanks to a flaw in pension accounting. However, that flaw has been fixed. Zombie companies? Bank mergers of the 90s? Give me some place to start.

So eBay would survive by jenningsthecat · 2014-09-30 05:40 · Score: 4, Interesting

in the admittedly unlikely but highly desirable eventuality of PayPal going down in flames.

--
'The Economy' is a giant Ponzi scheme whose most pitiable suckers are the youngest among us and the yet-unborn.

Re:So eBay would survive by meloneg · 2014-09-30 06:14 · Score: 4, Interesting

I'd think the reverse is more likely, eBay going down in flames and PayPal surviving. PayPal has diversified and isn't nearly as reliant on eBay while eBay competition has grown and they've lost their original focus.
Re:So eBay would survive by rolfwind · 2014-09-30 06:39 · Score: 1

eBay and Paypal are mutually beneficial. Paypal is absolutely reliant on ebay for sheer volume. It's their foundation.
But I just don't think sellers liked being cornered into having to accept PP 99% of the time.
eBay is off it's core market, chasing more lucrative opportunities. Problem is, they don't own that other market (amazon, alibaba), never will, and are pissing off their base with every new change. It's the curse of needing constant growth in our economy.
Re:So eBay would survive by Anonymous Coward · 2014-09-30 07:16 · Score: 0

Are there any other active auction sites?
I actually need to sell some computer parts and would love to use another service, but other than craigslist and old-school "want to sell" posts in online forums I haven't found anything...
Re:So eBay would survive by tlhIngan · 2014-09-30 07:47 · Score: 1

eBay and Paypal are mutually beneficial. Paypal is absolutely reliant on ebay for sheer volume. It's their foundation.
But I just don't think sellers liked being cornered into having to accept PP 99% of the time.
eBay is off it's core market, chasing more lucrative opportunities. Problem is, they don't own that other market (amazon, alibaba), never will, and are pissing off their base with every new change. It's the curse of needing constant growth in our economy.
Well, eBay and Paypal are fundamentally tied together.
eBay is a marketplace, but they don't do payments. Paypal does payments, and more importantly, Paypal lets random joe customer pay with a credit card to random jane seller WITHOUT a merchant account.
That's the key, because Amazon and Google and others are pretty much buyers are regular consumers, sellers are businesses (who may be single person owned and operated, but still has a business entity). Whereas sellers on eBay are made up of several groups, from standard companies to someone who found something in their attic one day. And the latter are NOT able to traditionally get a merchant account, which means they normally could only take limited forms of payment (cash, cheque, money order). Which over the Internet is... a stupid idea (who wants to go out and send a letter, wait a week, blah blah blah, when you can enter your credit card number and pay within minutes?).
Now, the eBay-Paypal split is probably to answer some of eBay's biggest customers (i.e., the people that run whole companies) to allow for alternate payment methods - including their own credit card payment system (or Amazon or Google), to be more flexible. Though you can probably guess eBay will mandate some form of credit card payment must be allowed, even if it means for most joe sellers, Paypal. (Again, because who wants to win an auction, then go out and get a money order by lining up at the post office, then mailing it out snail mail, and hope it gets there a couple of weeks later...).
Paypal has competition in all areas except person-to-person payments (well, they technically do have competition there too if you count bitcoins, but until someone makes it so I can buy bitcoins with my credit card and it magically all works like Paypal, it's a complex option).
eBay has network effects though - competition with eBay tends to be very niche or not at all. Because face it - eBay has customers, and sellers know that. And buyers know eBay sells practically everything. If you want me, as a seller to use something else, you better provide something good (usually in the form of lower fees). If you want me, as a buyer to use something else, you better provide something good for me (usually in the form of lower prices).
But there's a mismatch - buyers don't want to pay eBay prices off eBay, and sellers don't want to sell for much less than eBay because they'd just list on eBay instead. So sellers complain buyers "lowball" bids, while buyers complain that sellers ask so much it's just easier to stick with eBay.
Re:So eBay would survive by Anonymous Coward · 2014-09-30 09:36 · Score: 0

Paypal isn't going down in flames. eBay will however.
eBay bought Paypal when it didn't have it's own payment mechanisms. Then it started forcing users to use Paypal in the name of safety. So after they spin off Paypal, that instant-overlap that allowed for that safety is gone. So eBay is going to go down in flames once people start putting any payment method they damn well please on the listings. Likewise Paypal will start losing a larger chunk of the eBay business as this "must accept paypal" bit gets nerfed. Like if I were an investor I'd get out now.
Re:So eBay would survive by Anonymous Coward · 2014-09-30 17:47 · Score: 0

Hmmm .... really ...
Who are eBay's competition exactly? They dominate the online auction business.
Everything you say about eBay applies to Amazon, and I don't hear their shareholders complaining.
Re:So eBay would survive by Anonymous Coward · 2014-09-30 21:46 · Score: 0

Yes, they said "safety." What they meant was "we want to collect additional revenue for payment processing." If Ebay customers have more choices for payment processors it won't mean shit to Ebay, but Paypal will lose some money. Mostly I'm just happy that I won't have to use Paypal for Ebay purchases anymore. Now they just need to find a way to remove the Ebay from Ebay purchases and everything will be great.

I am an economics nub by what2123 · 2014-09-30 05:42 · Score: 1

However, I would be enlightened to understand why the two of them are too big to compete in the market place. Isn't the the whole idea of constant acquisitions. To be so big that you can "optimize and synergize" every damn thing out there? Eh, maybe they are right. Bigger you are the worse you are at doing the mundane.

Re: I am an economics nub by Anonymous Coward · 2014-09-30 06:17 · Score: 0

Perhaps the Blackstone, the Carlisle Group, Cerberus or some other private equity or souvereign invetment fund would like to take PayPal private. Wouldn't you love to see your net behavioral lpurchase data become the personal property of the shadow investors who rule the world? EBay's growth is slowing down, and with Alibaba's rise to glory, perhaps the big boys have other things in mind for it.
Re:I am an economics nub by Anonymous Coward · 2014-09-30 06:36 · Score: 0

In this case I think PayPal slowed down ebay. eBay tied itself to basically 1 payment system. They are an online auction website. They should have as many types of payment they can think of. Instead they became obsessed with every fee they could tack on and you must use paypal. This is driving users away in droves to amazon and craigslist.
Them joining up really ticked off tons of the sellers and buyers. They may be able to get that back if they change their ways.
I usually do not agree with ichan as he is a leach. But in this case he is right (by luck).
Re:I am an economics nub by alexander_686 · 2014-09-30 06:39 · Score: 1

Yes – the reason to merge is to "synergize." However, you are assume that mergers always lead to the expected benefits. This only actually happens about 1/3 of the time. About a 1/3 of the time you get "bleh". And about 1/3 of the time you get dissynergies. Not all marriages work out to be happily ever after.
Re:I am an economics nub by tomhath · 2014-09-30 07:34 · Score: 4, Insightful

PayPal can't go after other auction/retail business because it's part of eBay, eBay can't use other payment systems because it owns PayPal. By splitting them apart there's more room for both of them to grow. Kind of a reverse gestalt.
Re:I am an economics nub by Anonymous Coward · 2014-09-30 10:36 · Score: 0

However, I would be enlightened to understand why the two of them are too big to compete in the market place. Isn't the the whole idea of constant acquisitions. To be so big that you can "optimize and synergize" every damn thing out there? Eh, maybe they are right. Bigger you are the worse you are at doing the mundane.
Large corporations are all about churn. Aquire, merge, divest, rinse, repeat.
That's where the real money is made. Not in producing and selling products. Pump up the share prices. Grant options. Award bonuses to the Executive Suite for successfully plundering the company.
Re:I am an economics nub by PPalmgren · 2014-10-01 01:47 · Score: 1

This is correct. The business I work for had to do the same thing. We had different divisions that had different core competencies that synergized well, but having them joined at the hip made it impossible to diversify. Customers looked at you with disdain because they thought you'd treat them like a second class citizen to your sister company. Truth was we wanted to diversify because all parts of the business were simply too reliant on the one big customer, and it made the companies worse. Separating our company learn to compete with others in their core competencies more effectively and be less effected by the downswing of one specific division. It also removed preferential treatment.
Re:I am an economics nub by eric_harris_76 · 2014-10-01 14:33 · Score: 1

Sounds reasonable. My employer, long before I hired on, did much the same thing.
They split off one part of the business as a separate company, since the one company's customers were customers of the other company. This meant that the customers of the spun-off company's competitors were at a disadvantage. Or were perceived to be.
Post-spinoff, Company S's customers wouldn't be locked in to using Company E. And customers of companies competing with Company S wouldn't feel like they were getting less attention than customers of Company S, if they chose to go with Company E.

--
There's no time like the present. Well, the past used to be.

Then eBay can become a bank. by Animats · 2014-09-30 05:43 · Score: 3, Interesting

Then eBay can become a bank. In exchange for more regulation, they get to do lending and can borrow from the Fed.

Re:Then eBay can become a bank. by nospam007 · 2014-09-30 06:00 · Score: 4, Interesting

"Then eBay can become a bank. "
Since July 2007, PayPal has operated across the European Union as a Luxembourg-based bank.
Re:Then eBay can become a bank. by aitikin · 2014-09-30 06:09 · Score: 2

"Then eBay can become a bank. "
Since July 2007, PayPal has operated across the European Union as a Luxembourg-based bank.
But within the US they are not considered a bank, allowing PayPal to freeze funds of US citizens with no legal reason or ramifications. Additionally, point to make towards the OP, PayPal has owned Bill Me Later for a long time, and have been lending for years.

--
"Don't meddle in the affairs of a patent dragon, for thou art tasty and good with ketchup." ~ohcrapitssteve
Re:Then eBay can become a bank. by alexander_686 · 2014-09-30 06:18 · Score: 2

There is a huge regulatory difference. (At least from the US perspective. I think Europe is roughly in line.)
Pay Pal is currently a "money transfer agent". That has fairly light regulatory requirements, mainly around money laundering.
If Pay Pal began offering financial services – like credit cards, then it would be treated as a real bank. This means a whole new world in terms of regulations. It also means that the Federal Reserve would not only regulate Pay Pal but would also regulate eBay as a bank holding company.
Re:Then eBay can become a bank. by Lennie · 2014-09-30 07:01 · Score: 1

I'm sure TTIP will solve any problems like that ;-)
https://en.wikipedia.org/wiki/...

--
New things are always on the horizon
Re:Then eBay can become a bank. by Payden+K.+Pringle · 2014-09-30 07:15 · Score: 1

BillMeLater is now Pay Pal Credit. Maybe that's the direction they are heading?
Re:Then eBay can become a bank. by alexander_686 · 2014-09-30 07:28 · Score: 1

That is an exclent example to my point. BillMeLater is explicitly not a bank and does not offer loans, credit card services etc. It is a payment system. The "Bill Me Later" part is handled by a outside 3rd party - Comenity Capital Bank
Re:Then eBay can become a bank. by Anonymous Coward · 2014-09-30 08:20 · Score: 0

That is an exclent example to my point. BillMeLater is explicitly not a bank and does not offer loans, credit card services etc. It is a payment system. The "Bill Me Later" part is handled by a outside 3rd party - Comenity Capital Bank
PayPal offers the Extras MasterCard. In my area, the chain store Dollar General offers Paypal and a payment method at checkout.
Re:Then eBay can become a bank. by alexander_686 · 2014-09-30 09:01 · Score: 1

More excellent examples.
The Master Card is a example of a "branded' cards – it carries the Pay Pal's brand but issued by a unrelated 3rd party bank. It is the 3rd party bank that has to deal with the heavy regulations of being a bank. I would also guess they pick up most of the profits.
The Dollar General is an example of Pay Pal being a "money transfer agent" – which has very low regulations. So while it is a financial institution, it is not acting as a full blow "bank".
Re:Then eBay can become a bank. by Anonymous Coward · 2014-09-30 10:40 · Score: 0

But within the US they are not considered a bank, allowing PayPal to freeze funds of US citizens with no legal reason or ramifications. .
So... they're a division of the IRS?

GOODBYE, eBAY! WE REMEMBER YOU! by Jeremiah+Cornelius · 2014-09-30 05:44 · Score: 2

Hello eBaba!

Remember when they bought and sold Skype? ;-)

--
"Flyin' in just a sweet place,
Never been known to fail..."

Now ebay will have a dickish payment form too? by Anonymous Coward · 2014-09-30 05:45 · Score: 0

I always thought it was funny as hell that on ebay you could pay instantly from credit card while every where else you have to click your intent twice, login 'again', and click through a payment plan offer.

lol capitalism. by Anonymous Coward · 2014-09-30 05:52 · Score: 0

But full market value might be liberated. Good news for anyone who owns eBay through their 401K. Carl Icahn is our friend.

I am an economics nub by Anonymous Coward · 2014-09-30 05:55 · Score: 0

An argument can be made the the different parts will appeal to different sets of investors in a a way a combined eBay cannot. Companies merge and split, in each case to maximize market value. That is all that matters.

PayPal is obsolete by ArcadeMan · 2014-09-30 06:19 · Score: 0

I pay everything in Dogecoins.

--
Get free satoshi (Bitcoin) and Dogecoins

too big to be acquired by Culture20 · 2014-09-30 07:03 · Score: 1

PayPal's yearly revenues exceed $7 billion ... they're also too big to be acquired, which is on [investors'?] minds after the ludicrously successful Alibaba IPO

Just ask for dividends.

Re:too big to be acquired by RabidReindeer · 2014-09-30 10:38 · Score: 1

PayPal's yearly revenues exceed $7 billion ... they're also too big to be acquired, which is on [investors'?] minds after the ludicrously successful Alibaba IPO
Just ask for dividends.
What are you, some kind of Communist?

I hope the new owners by Presto+Vivace · 2014-09-30 07:22 · Score: 1

address the customer service problems. I regard PayPal as unusable.

Re:I hope the new owners by Nyder · 2014-09-30 07:30 · Score: 1

address the customer service problems. I regard PayPal as unusable.
They won't. That cuts into the bottom line.

--
Be seeing you...

Ripped me off by Anonymous Coward · 2014-09-30 07:30 · Score: 0

Paypal and ebay ripped me off, so I don't do business with them anymore. I don't care if it's cheaper there, I'll pay more for integrity.

Investor(s)? by Anonymous Coward · 2014-09-30 07:30 · Score: 1

Despite his ego Icahn doesn't count as plural. I wish that guy would STFU and I also wish that the term "activist investor" would stop being applied to greedy people like him. It's not like he's promoting clean energy or trying to shut down sweatshops or such.

What took so long? by BBrown · 2014-09-30 07:39 · Score: 1

Interestingly, this was predicted quite a few years out. I wonder what took so long?

Kucera over at Bloomberg seems to be one of the earliest analysts to identify it back in very early 2012: http://www.bloomberg.com/news/...

do as carl icahn wants by jsepeta · 2014-09-30 07:40 · Score: 1

how to the rich get richer? they have sponsors like carl icahn who come up with nefarious plans to squeeze profits from services, ahem, from customers.

--
Remember kids, if you're not paying for the service, YOU ARE THE PRODUCT THAT IS BEING SOLD.

Re:do as carl icahn wants by justcauseisjustthat · 2014-09-30 16:41 · Score: 1

There should be laws against corporate raiders (public relation name = activist investors).

Re:GOODBYE, eBAY! WE REMEMBER YOU! by Anonymous Coward · 2014-09-30 08:24 · Score: 0

Skype was never a logical choice for eBay. I guess they wanted to make an impact and buy something "big" before somebody else would snatch it away. Maybe someone really thought it could add something in bringing buyers and sellers together...

While Amazon started doing a lot of the same that eBay did, they also became one of the few serious competitors to Netflix and a big cloud hosting provider. Then there is Alibaba, doing exactly what eBay does and more... and probably even better. What exactly did eBay do..? Nothing.

Their website is an unorganized, confusing mess. I use their site regularly, it randomly switches from one language to another if you're searching for offers in multiple countries. Their transaction and communication systems are awkward. Their search engine is bad, often you'll find stuff better via Google than via their own search.

And what did PayPal do in the last 10 or so years? Exactly nothing... Everything is still awkwardly slow, they still screw merchants and customers over, like they always did and they still don't give a f*ck about their actual customers. Having lots of funds in your PayPal account is a serious financial risk, as they take it from you as they please.

Splitting the whole thing off doesn't make a long-term sense, it's just some extra money in the short run, because of lack of creativity...

Taking bets by McFortner · 2014-09-30 08:40 · Score: 1

I wonder what the over/under is on how long before the new ebay creates yet another version of PayPal?

--
Beware of Sales Reps bearing gifts.

can someone dumb this down form me by Anonymous Coward · 2014-09-30 08:55 · Score: 2, Interesting

Pardon my ignorance but i don't understand the term spin off in this sense. Ebay owns paypal now but wont after this is that correct? what compensation does ebay and its stock holders get for spinning off paypal. If they are not selling PayPal how do they make money from getting rid of it. If they are not making money why would they let this huge profitable part of the business go for free. can someone explain how the spin off works.

Re:can someone dumb this down form me by smwny · 2014-09-30 18:03 · Score: 3, Informative

Pardon my ignorance but i don't understand the term spin off in this sense. Ebay owns paypal now but wont after this is that correct? what compensation does ebay and its stock holders get for spinning off paypal. If they are not selling PayPal how do they make money from getting rid of it. If they are not making money why would they let this huge profitable part of the business go for free. can someone explain how the spin off works.
Its stock holders get an equal number of shares in the new company. So if you own 10 shares of ebay, you will now own 10 shares of ebay and 10 shares of paypal. You can then buy and sell each one independently of the other. For some companies, the whole company is greater than the sum of its parts. In this case, the powers that be (the board members), have decided that each one would be worth more on its own than bundled together.

This could be because they are interested in acquisition. It could be they are afraid want to take risks with one or both of them and are afraid of one hurting the other. And it could be for another reason entirely.

We don't know because the board has not told us the reason. However, they did manage to use quite a few words to not tell us thre reason:

In its recently completed review, the board concluded:

A changing competitive landscape creates enormous opportunities for eBay and PayPal; separation will create sharper strategic focus and better position each business to capitalize on those growth opportunities as independent companies. The pace of industry change and innovation in commerce and payments requires maximum flexibility to stay competitive and drive global leadership.

The benefits of the existing relationships between eBay and PayPal will naturally decline over time and can be optimized in arm's length operating agreements between the two entities. Arm's length operating agreements can formalize the existing relationships between the two companies and capture ongoing synergies.

This is the best path for delivering sustainable shareholder value. eBay is a leading global commerce platform that has benefited from PayPal, and PayPal is a strong, rapidly growing global payments leader because it has been part of eBay. But beyond 2015, eBay and PayPal will each benefit more and create greater value from the strategic focus, speed, flexibility and agility that come with being independent publicly traded companies.

Since when do eBay and Paypal compete? by ayesnymous · 2014-09-30 08:59 · Score: 1

"investors are worried that eBay and PayPal together are too big to compete effectively." Ebay and Paypal don't compete. Ebay doesn't have any payment services (BillMeLater is also owned by Paypal). Paypal doesn't let people post items for sale.

Re:Since when do eBay and Paypal compete? by RubberDogBone · 2014-09-30 19:15 · Score: 1

They compete in the sense that eBay + PayPal is a competitor to something like Amazon which means Amazon won't let people pay via PayPal.
Split off, with PayPal on its own again, then only eBay will compete with Amazon directly, although PayPal will still compete with Amazon payments, there is a better chance Amazon will accept it, since they want to let people spend money.
And on the other side, there is no real advantage to eBay in keeping PayPal linked. It will still be a payment option just as it is now.

--
Sig for hire.

Since when do eBay and Paypal compete? by Anonymous Coward · 2014-09-30 09:33 · Score: 0

Not with each other dumbass. Compete with their competitors.

This could be a good thing... by jonwil · 2014-09-30 09:37 · Score: 3, Interesting

For example, if eBay no longer owns PayPal (or has any connection to it) they no longer have the incentive to force people to accept it (or like they did in Australia before they got in trouble for it, make PayPal the only method of payment).

Also maybe this will impact the ability of eBay to do certain things they do now like holding money from an eBay auction instead of releasing it to the seller straight away.

Re:GOODBYE, eBAY! WE REMEMBER YOU! by sd4f · 2014-09-30 11:13 · Score: 2

If you think ebay doesn't care about their customers, they care even less for their sellers. Unfortunately, ebay is crap, but it still has the largest audience in some places, so it's where people go. That's why ebay gets away with being complete scumbags to the sellers, since the customers, generally, are there.

I think this behaviour tends to be a rather typical american business practice when they have a captive market. They just want to screw everyone.

You're not a stock owner, are you? by Anonymous Coward · 2014-09-30 11:25 · Score: 0

First, it has nothing to do with Alibaba's IPO and everything to do with Apple's new one touch payment.

Second, being opposed to hostile takeover is a bad thing. I will put it simply, if you owned some stock of eBay, why would you want to discourage somebody offering you a price that is higher than it is trading for today? I mean, yes, one could insert poison pills and stuff to damage and tarnish your stock, decreasing it's value so people would stay away, but once again why?

Most of the time it is managers, not the owners, who are opposed to hostile takeover. They face a bum choice. They could work hard to keep the stock price. Or they could slack off, be bought up, and then be fired. Of course they have pay packages in the millions so I don't feel too sorry for them.

When you're a stock owner, if you don't think that stock is worth more than it is trading for today then you would have moved to sell your stock before the takeover. The reason to own a stock is because you believe it is worth more than it is trading for today. Plenty of stock owners will be opposed to a hostile takeover when they believe the takeover folks are offering less than they think the stock is really worth. What a hostile takeover does is force you to sell your property for less than you think its worth.

Slashdot was fore square agin that idea when it came in this other form: http://en.m.wikipedia.org/wiki/Kelo_v._City_of_New_London

Re:You're not a stock owner, are you? by alexander_686 · 2014-09-30 14:34 · Score: 1

Hey, have you read “Barbarians at the Gate?”. It is a old but good book.
O.K., let walk though the logic. eBay is currently at $56.30. Let us assume you own eBay. Ergo, this mean you think it is undervalued.
First question, would you be willing to by my stock in eBay at $75? $60? 56.80?
Second question, if it is undervalued, why are you not buying up eBay until it's fair value? You have a compelling story and strong logic. Why not try to convince your friends to by the stock and charge them a fee? That is what essentially Hedge Fund managers do.
Third question – can you tell me specifically why you think eBay is priced below it's fair value. Using your logic every single stock being traded is being traded below it's fair value.
I can answer part of your third question. Some people buy stock because they want to own a fraction of future earnings. Other people hold onto the same stock because they think the company sucks but that there will be some type of catalytic event that will release shareholder value – such as an outside hostile bidder that will buy out the company, kick out the incompetent managers, and turn the company around.
Of course, it all comes down to one's opinion – right? When there is a hostile bid there is no reasons why people like you can't bid the stock up to the right level – it has happened . But when managers fight are they fighting for you for your own jobs. I will point out that 9 times out of 10, when a hostile takeover is launched – or even just a proxy fight – things happen. The company decides to sell itself off to another company, major restructurings, mass firings of board members.

Ebay is always changing by Anonymous Coward · 2014-09-30 12:38 · Score: 0

And that drives me nucking futs. They recently changed the 'My Ebay' page and trashed my preferences in favor of their preferences. That sucks in that it disrespected me, one of their million or billion greatest assets.

Sears/Discover by Anonymous Coward · 2014-09-30 15:14 · Score: 0

This is Sears and Discover all over again:

http://en.wikipedia.org/wiki/Discover_Card

Retail+finance are two things that constantly come together (to avoid transaction fees) then divest
(being linked to one retailer limits growth). This is more about PayPal then Ebay.

There are two upcoming big disruptions in the consumer finance market -- banks got too greedy with
fees so Wal-Mart announced they're getting into the "low cost" banking market and Apple pay came in
with the new technology at scale.

When there are big market disruptions there is money to be made; looks like investors (Ichann) wanted
their own uninhibited player (PayPal) in the market.

Fantastic! Bring on Paypal payments on Amazon by RubberDogBone · 2014-09-30 19:03 · Score: 1

The holy grail for me would be the ability to make payments on Amazon using PayPal, something not currently possible since they are rival companies with eBay in the mix.

But once it gets spun out or sold, perhaps, maybe, Amazon will begin accepting it. And I would love that.

--
Sig for hire.

Re:GOODBYE, eBAY! WE REMEMBER YOU! by Anonymous Coward · 2014-10-01 12:12 · Score: 0

LIKE only American businesses just want to screw everyone

76 comments