At the Goldman Sachs Technology and Internet Conference on February 11, eBay CFO Bob Swan confirmed that its payment unit PayPal required $5bn to make it an independent entity.
The money in question would be invested offshore, he added.
eBay ended 2014 with a cash count of $6.3bn, but it appears PayPal will sweep away most of it before parting, although the necessity for such buffer is being questioned. In 2014, PayPal’s revenue had increased by 19% — over three times eBay’s core business.
The planned breakup to make PayPal separate from eBay will be worked through by the internet retailer later this year. Another of eBay’s arms, eBay Enterprise, which helps firms with logistics and online business strategy, is also up for sale.
The soon to step down Swan explained that the succeeding CEO Devin Wenig would find the marketplace smaller yet more concentrated.
According to Swan, eBay had become a "catch-all marketplace" catering to both the lower and higher strata of customers under John Donahoe, the present CEO. Business now, he said, would be focussed only on the 40% that "loves great deals".
In other words, he opined that Wenig would be managing a marketplace for low-end buyers. This new approach apparently arms eBay to compete better with sites that promise low prices, such as Overstock.com and the soon to unveil Jet.com.
Swan finally announced that the scaling back of 2,400 eBay employees was almost over and the step was crucial to "accelerate the pace of innovation". But it is considered by analysts to be just a strategy on the part of eBay before putting itself up for sale.