Icahn’s suggestion, a decision he described as “a no-brainer”, came as he revealed he now owns around 0.82 percent of eBay following a recent investment in shares and derivatives, and also the day after the company revealed its fourth quarter and full year results for 2013.
In a statement, eBay thanked Icahn, who last year was heavily involved in buyout talks with PC manufacturer Dell, for his suggestion, saying, “eBay’s Board of Directors routinely assesses the company’s strategic direction and has explored in depth a spinoff or separation of PayPal.
“(The board) 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.”
eBay’s financial results showed that fourth quarter revenues rose 13.5 percent to $4.53 billion (£2.73 billion), with overall 2013 revenues rising 14 percent compared to the previous year. PayPal’s total payments volume, which measures how much the service is used to complete a transaction, rose 25 percent to $180 billion (£108.6 billion) worth of transactions. Following the results, shares in the company jumped by 12 percent at the close of trading.
Icahn also nominated two employees to eBay’s board, a suggestion that was again rebuffed, with the company saying it would consider their nominations but that it already had, “a world-class board of directors who have significant experience in technology and financial services”.
eBay acquired PayPal in 2002 for $1.5 billion (£905 million). The online payment model has become a key feature of eBay’s growth and success, despite often coming under attack regarding its security provisions. However, in the face of increasing competition from rivals, eBay has to consider how it can best stand out and ensure its relevancy in an ever more crowded market.
In a conference call following the company’s financial results, eBay Chief Executive John Donahoe told analysts there was little chance of the two companies splitting, saying, “First, eBay accelerates PayPal’s success. Second, eBay data makes PayPal smarter. And third, eBay funds PayPal’s growth”.
Icahn’s pronouncements came after he also revealed his stake in Apple was now around 0.6 percent, placing him in the top 20 investors in the company. Revealing that he had recently ploughed $500 million (£300.9 million) in Apple stock, another decision he called a ‘no-brainer’, Icahn called for the maker of the iPhone to give back a greater share of its supposed $150 billion (£90.5 billion) cash fund to investors, saying, ““We feel [the] Apple board is doing great disservice to shareholders by not having markedly increased its buyback.”
Icahn is looking to force Apple CEO Tim Cook to discuss returning the extra billions at the company’s shareholder meeting on February 28. He has proposed a motion that would commit the company’s board to completing, “not less than $50 billion of share repurchases” during Apple’s fiscal year if approved.
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