E-commerce giant eBay has announced a restructuring plan that includes cutting 2,400 jobs and a sale or IPO of its enterprise unit.
The company also announced that it has an agreement in place with major shareholder Carl Icahn that will enable it to establish PayPal as a separate company in 2015 as planned.
The agreement will give investors a greater say in the PayPal business once it is spun off in the second half of the year.
“We will be simplifying organisational structures to focus the businesses and ensure that we are set up to compete and win,” the company said in a statement.
Market commentators said the restructuring plans were aimed at cutting costs across eBay in the facing of growing international competition in the e-commerce market.
Ebay said it planned to reduce its global workforce by 7% across eBay Marketplaces, PayPal, and eBay Enterprise in the first three months of 2015.
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Focus on core markets
The company said it was exploring “strategic options” for eBay Enterprise, including a sale or issuing publicly tradable stock shares in an IPO to create an independent company.
The statement said there were “limited synergies” between eBay Marketplaces and eBay Enterprise, and a separation will enable each to focus on their core markets.
The tech giant also said it had made an agreement with activist investor, Carl Icahn, to give investors a greater say in its PayPal business once it is spun off in the second half of this year.
“We are confident this is the right strategic path for each business,” said John Donahoe, president and chief executive of eBay.
Ebay announced the restructuring plan in its earnings report for the quarter ending 31 December 2014.
Fourth quarter revenue increased 9% to $4.9bn and net income was up 10% to $936m compared with the same period in 2013.
"In a year of unexpected events and distractions, we ended 2014 with double-digit revenue growth, solid earnings growth and strong cash flow, reflecting the fundamental strengths of our company," said Donahoe
"PayPal had another strong quarter, finishing an excellent year. While facing challenges, eBay continues to be a great business and is focused on stabilising performance and engaging its core customers,” he said.
Ebay’s New York listed shares rose 2.6% in after-hours trade, according to the BBC.