PayPal to separate from eBay in 2015

[Omaha Steve]

Source: AP-EXCITE

SAN JOSE, Calif. (AP) — The mobile payment service PayPal is splitting from eBay and will become a separate and publicly traded company next year.

Almost a year after billionaire Carl Icahn opened a proxy fight and pressured eBay for a spinoff of PayPal, eBay President and CEO John Donahoe announced the split Tuesday.

Donahoe will step down as CEO of eBay after overseeing the separation of the two companies and will not have a management roll in either of the two afterward. He may have a seat on the board at one or both, along with eBay Chief Financial Officer Bob Swan.

EBay, based in San Jose, California, said that the separation was the best path for growth and shareholder value creation for each business.

FULL story at link.



FILE - In this Wednesday, Feb. 27, 2013, file photo, attendees walk in front of an EBay and PayPal display area at the Mobile World Congress, the world's largest mobile phone trade show, in Barcelona, Spain. PayPal is splitting from EBay Inc. and will become a separate and publicly traded company during the second half of 2015. (AP Photo/Manu Fernandez, File)


Read more: http://apnews.excite.com/article/20140930/us--ebay-paypal_split-313bf248c0.html

[cosmicone]

4. Its a roll in the hay

doesn't need butter

[groundloop]

5. Would you please pass the roles?

[cosmicone]

7. As soon as I am done with the role call

because a roleing stone gathers no moss.

[groundloop]

2. Somehow I suspect this isn't being done to benefit consumers

If Carl Icahn is in any way shape or form involved I know that this isn't about helping consumers or the average joe shareholder.

[IthinkThereforeIAM]

6. I agree...

... PayPal has been a great service for me, so I am somewhat conflicted here. I know there are other payment systems out there, but having had used one of them for an eBay purchase a couple of years ago, PayPal is a breeze to go through in comparison.

It seems every time a rotten business deal, ie... GM and especially Chrysler bankruptcies, Icahn's name is in there somewhere.

[corkhead]

3. When I see "Shareholder Value" in a press release I don't necessarily look at that as a good thing.

Pump & Dump. Make a few more billionaires. Customers are unfortunately a necessary evil but they are of secondary concern.

[demigoddess]

8. Oh God, I hope not!

Paypal is being used by more and more shopping sites other than ebay, and I enjoy having the convenience and safety. Paypal has always been more careful in the security end, so many stores are being hacked for credit card numbers.

[Xithras]

9. The payments space is getting crowded. It's a good move by EBay.

Back when EBay acquired Paypal, there weren't a lot of options if individuals wanted to transfer money to each other. Because Ebay was so dependent on small personal payments for their business model, it made sense for them to purchase Paypal and ensure that it stayed operational.

Nowadays everyone from Square to Apple is diving into the space. Banks are also offering their own micropayment systems, and the fundamental technologies behind credit cards may be changing dramatically in the coming years. Just as worrying, Paypal has invested a lot of money into Point of Sale support in recent years, with only minor success. With Apple and Intuit also moving into that space, Paypal is facing a real possibility that it may lose its crown as the de facto payment system for the web.

This creates a bit of a conundrum for Ebay. If Paypal loses its place at the top, or is even forced to share the top with competitors, its flagship auction site and merchant site systems will have to choose between staying loyal to their own brand, or supporting a competitors product at the cost of their own. If the Paypal people insist that EBay put its weight behind its own brands and force the site to stick with its current Paypal-preferred model, they risk losing customers and merchants on the auction sites as users preference adjusts to those other services. If they adopt whatever competitor products displace Paypal, it would be seen by the market as an acknowledgement that Paypal is declining, and would greatly undermine investor and user confidence in Paypal itself....which would sink EBay stock.

Of course, that also presumes that Paypal is displaced. Alibaba's Alipay service has done a lot to destroy personal banking in Asia, and there has been quite a bit of discussion this year about Paypal taking that same path and becoming a full service bank instead of a simple payment clearinghouse. Considering that Goldman Sachs has already been acknowledged as one of the power brokers behind this split, the probability of this happening has increased exponentially. However, because EBay is primarily a retail sales company, they would have a hell of a time meeting the federal requirements needed to operate as a bank. Banking is not something you can do as a "side business".

Spinning the company into two parts allows each company to pursue their own destinies without harming each other.