Categories Retail, U.S. Markets News

Under investor pressure, eBay commits to review of non-core businesses

Responding to the demand by activist investors to bring discipline to its operations, eBay (EBAY) has announced fresh initiatives under its ongoing operational review. The latest measures, which echo the suggestions put forth by investor Elliott Management in a letter sent to the company two weeks ago, include exploring options for the non-core business units.

The company Friday entered into a cooperation agreement with Elliott and Starboard Value, under which two directors recommended by the investor group will be appointed to eBay’s broad. Jesse Cohn, a partner to Elliott, and Matt Murphy of Marvell Technology Group, in which Starboard owns a stake, are the new directors. The appointment of a third director later this year is also in the cards.

Meanwhile, the review is likely to seal the fate of eBay’s subsidiary and online ticket sales platform StubHub. For long, the investor group has demanded the divestment of the business for its unimpressive performance in recent years. The classified ads unit is another business for which options are being explored. The latest move assumes significance in the wake of the company facing stiff competition from Amazon (AMZN) and other online marketplaces.

For long, the investor group has demanded the divestment of StubHub for its unimpressive performance in recent years

Elliott has reportedly convinced CEO Devin Wenig that the company will benefit significantly in terms of market value if the proposals are implemented. Wenig, who is already under pressure due to the challenging market scenario and softening growth, has a tough task ahead. The investors are apparently encouraged by the recent introduction of dividend by eBay’s leadership, with a promise to return more than $7 billion to shareholders in the next 24 months.

After returning to profitability in the fourth quarter from a loss in the prior-year period, eBay is currently looking for revenues of $10.7-$10.9 billion and adjusted earnings of $2.65 per share for fiscal 2019. Earlier, the company had overhauled its regional operations, which included workforce-reduction.

A year after reaching an all-time high, eBay shares opened Friday’s trading higher and stayed in the green throughout the session. The stock had a positive start to 2019 and gained nearly 30% since the beginning of the year.


Get access to timely and accurate verbatim transcripts that are published within hours of the event

Most Popular

Should investors worry about Micron’s (MU) weak Q4 results and guidance?

The semiconductor industry is a rapidly growing business segment that currently thrives on the digital transformation wave. The demand for memory chips and other semiconductor products increased over the years,

What has Bed Bath & Beyond (BBBY) outlined for this fiscal year?

Shares of Bed Bath & Beyond (NASDAQ: BBBY) were up on Friday, a day after the company delivered disappointing results for the second quarter of 2022. The company reported a

NKE Earnings: Highlights of Nike’s Q1 2023 results

Nike, Inc. (NYSE: NKE) has reported a decrease in net profit for the first quarter of 2023, despite a modest increase in revenues. The company's stock suffered a big loss

Add Comment
Viewing Highlight