Icahn blasts eBay's CEO, board in letter; shares gain


Carl Icahn pulls no punches in a letter to eBay (EBAY +3%) shareholders that blasts the perceived conflicts of interests of board members Marc Andreessen and Scott Cook, and declares CEO John Donahoe appears to be "completely asleep or, even worse, either naive or willfully blind."

Icahn, still calling for a PayPal split, notes Andreessen's VC firm was part of an investor group that "bought 70% of Skype for less than what eBay had paid to acquire it," and that it would later be sold to Microsoft for ~3x eBay's sale price.

He also claims Andreessen has made investments in at least five eBay competitors, four of which are PayPal rivals, while on eBay's board.

Icahn observes director Scott Cook is the former CEO of Intuit (INTU - a mobile payments rival to PayPal), and remains on Intuit's board. He also claims a "pending DOJ complaint" exists regarding a no-hire pact between eBay and Intuit.

eBay has responded to Icahn's letter. The company: 1) Defends the Skype sale, and says Andreessen was "recused from all decision making" related to the deal. 2) Says Andreessen isn't up for re-election to the board. 3) Calls Cook "an enormous asset" to eBay's board, and insists the product overlap between eBay and Intuit is small.

Icahn has nominated two directors to eBay's board.

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Comments (23)
  • Seeker137
    , contributor
    Comments (422) | Send Message
     
    Icahn is absolutely correct on all the points he brings out.
    24 Feb 2014, 10:31 AM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1339) | Send Message
     
    eBay has to have one of the most clueless CEO's and leadership groups in tech (with the exception of Cisco's John Chambers). The history of mis-management goes back to Meg Witman and probably even before that. Customer relations are a joke and business initiatives are absolutely horrible.

     

    While I don't own eBay, if I did, I would support everything Icahn is trying to accomplish. If ever a company needed a shakeup in management, eBay is the poster child.
    24 Feb 2014, 05:28 PM Reply Like
  • tomlos
    , contributor
    Comments (1296) | Send Message
     
    What's the chances eBay splits off PayPal? More than likely.... zero?
    24 Feb 2014, 10:50 AM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1538) | Send Message
     
    Ebay's purchase and sale of Skype was one of the greatest shareholder ripoffs of all time. It is amazing that Meg Witman was able to get any job in corporate governance after pulling that off.
    24 Feb 2014, 11:16 AM Reply Like
  • Gedankonomist
    , contributor
    Comments (1028) | Send Message
     
    She should easily get a job in government!
    24 Feb 2014, 12:06 PM Reply Like
  • RoyalPhanta
    , contributor
    Comments (23) | Send Message
     
    After spending hundreds of millions of dollars trying to and still failing, I doubt it!
    24 Feb 2014, 11:25 PM Reply Like
  • SaGE_99
    , contributor
    Comments (36) | Send Message
     
    Or maybe not...remember her run for CA governor? The state is much too liberal to elect someone like her.

     

    She would have been a much better governor than Brown, but given that so many CA residents receive what they believe are entitlements, they surely will not vote for someone who will take them away.
    27 Feb 2014, 05:19 PM Reply Like
  • Seeker137
    , contributor
    Comments (422) | Send Message
     
    Icahn's eBay letter is damning. Here's just an excerpt: "We have found ourselves in many troubling situations over the years, but the complete disregard for accountability at eBay is the most blatant we have ever seen," Icahn writes.
    He goes on that the CEO John Donahoe "seems to be completely asleep or, even worse, either naive or willfully blind."
    24 Feb 2014, 11:31 AM Reply Like
  • buyzjewelry
    , contributor
    Comments (33) | Send Message
     
    Glad to see someone stand up to eBay's mafia ways. Donahoe appears to be a Tony Soprano wannabe.
    24 Feb 2014, 12:09 PM Reply Like
  • Gedankonomist
    , contributor
    Comments (1028) | Send Message
     
    “Never ever hire an MBA; they will ruin your company.” -Peter Thiel
    24 Feb 2014, 12:10 PM Reply Like
  • cruisintx1
    , contributor
    Comments (4) | Send Message
     
    Icahn sure knows how to get the stock price up.
    24 Feb 2014, 01:19 PM Reply Like
  • Dr Joseph Haluska
    , contributor
    Comments (499) | Send Message
     
    The way I see it, Mr. Icahn's lesson: A fiduciary has no place being politically correct. Just think what it would be like without him. Just think what it would be like if we had more like him!
    24 Feb 2014, 05:57 PM Reply Like
  • D.B. Kim
    , contributor
    Comments (137) | Send Message
     
    eBay would be better off without Andreessen and Cook on the Board, but I don't believe Paypal would be better off separated from eBay.
    24 Feb 2014, 08:21 PM Reply Like
  • SaGE_99
    , contributor
    Comments (36) | Send Message
     
    I agree 100%. Turn over the board, but leave PayPal in place.
    27 Feb 2014, 05:23 PM Reply Like
  • CassandraSees
    , contributor
    Comments (589) | Send Message
     
    If Ebay is so badly run and so awful, according to Icahn (and many of the comments above) why does Icahn even want to waste his time with this company, when there must be hundreds of other companies which must be more worth his time? What is his ultimate goal with this company, what would be his benefit and how will it affect the company down the line?
    24 Feb 2014, 09:07 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1339) | Send Message
     
    In a word - PayPal.

     

    Splitting PayPal off into a separate entity would raise billions in capital - and in the process leave eBay a pretty empty earnings shell. However, like Alibaba with Yahoo, the parts (of eBay) are probably worth more then the whole.
    25 Feb 2014, 01:31 AM Reply Like
  • alkmaar
    , contributor
    Comments (30) | Send Message
     
    I think Icahn is in it for a short to medium term gain. He sees value in the investment, in particular in a breakup of the company, as compared to others that are more expensive (like Amazon).
    25 Feb 2014, 03:00 AM Reply Like
  • Seeker137
    , contributor
    Comments (422) | Send Message
     
    @alkmaar, ironic and amusing that Donahoe from Bain Capital- a company notorious for breaking up companies and doing "asset stripping" now finds himself attempting to defend the latest company he has almost destroyed (eBay) from Icahn. This is irony at its height.
    25 Feb 2014, 10:14 AM Reply Like
  • mg10011
    , contributor
    Comments (193) | Send Message
     
    As opposed to EBAY Board members like Andreesen and Cook, who think so much about the long-term benefit of Ebay while they line their pockets with incredibly valuable information about what Paypal is doing to help their VC funded companies or Intuit, respectively?

     

    Or was it the fact that Andreesen withheld significant views on the value of Skype and Kinetics from Ebay's board to help enrich himself and his fund at EBAY shareholder's expense? Was that the necessary type of long-term thinking you're looking for that Icahn lacks?
    25 Feb 2014, 12:20 PM Reply Like
  • SaGE_99
    , contributor
    Comments (36) | Send Message
     
    He is looking for a quick buck by splitting off paypal.

     

    I am an Ebay investor and will be voting against a divestiture of PayPal unless we can get a buyer who is willing to give us a multiple similar to what Facebook paid for WhatsApp.
    27 Feb 2014, 05:33 PM Reply Like
  • mg10011
    , contributor
    Comments (193) | Send Message
     
    It just goes to show that the Silicon Valley mafia is just as insular and self-serving, even more so I think, than the supposed "bad villains" of Wall Street. Most of these tech titans are lauded for "innovation" when in reality they've done very little of that, and worse, they are given a free pass when it comes to truly unethical behavior.

     

    Both of these guys are supposed fiduciaries, yet they completely used their position, so it seems, to enrich themselves contra their fiduciary obligations.

     

    Icahn is totally right here in that the corporate governance culture at EBAY (and probably at many tech firms) is pretty grotesque.
    25 Feb 2014, 12:24 PM Reply Like
  • Seeker137
    , contributor
    Comments (422) | Send Message
     
    So when do the Feds (FTC, SEC) step in and do something about these white collar tech titan criminals?
    26 Feb 2014, 08:34 AM Reply Like
  • SaGE_99
    , contributor
    Comments (36) | Send Message
     
    Amazon's valuation is a joke. They operate in a hypercomepetive envioronment (selling everything from tablets, consumer staples, and cloud computing, which is quickly becoming a commodity). As a consumer, I like Amazon because they are cheap, but as soon as they raise their prices and/or collect state taxes where I live, I'll be moving on to the new best deal. As an investor, I'll keep my distance.
    27 Feb 2014, 05:29 PM Reply Like
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