Leon Cooperman tells CNBC he backs fellow eBay (EBAY -1%) shareholder Carl Icahn's call for a PayPal spinoff. Cooperman's Omega Advisors owned 855K eBay shares (less than a .1% stake) at the end of Q4.
Meanwhile, Icahn (2%+ stake) has fired a fresh broadside at eBay CEO John Donahoe over his handling of the Skype sale (previous), declaring his "inexcusable incompetence" cost shareholders over $4B.
The letter comes shortly after eBay (as expected) rejected Icahn's board nominees. Both Icahn and Donahoe claim to have strong shareholder support for their PayPal stances.
Though eBay's (EBAY +2.1%) management and board may not be thrilled with Carl Icahn's war of words with the company, shares are now up 7% since the activist investor took aim at eBay's governance on Monday morning.
This morning, Icahn issued a new letter in which he took up eBay's challenge to have an "honest, accurate, debate" with him (CNBC has offered to host), and say he sent a letter yesterday to eBay yesterday "demanding to inspect all books and records" related to the sale of Skype to an investor group featuring board member/VC Marc Andreessen.
Icahn also calls ex-Intuit CEO Scott Cook's presence on the board akin to Seattle Seahawks coach Pete Carroll "sitting in when the Denver Broncos were constructing their game plan."
Meanwhile, eBay founder Pierre Omidyar is once more defending his company's decision not to spin off PayPal, and calls Icahn's claims regarding Andreessen and Cook "unfounded."
eBay Marketplaces chief Devin Wenig recently stated eBay might fully acquire Snapdeal down the road, while cautioning no decision has been made.
Snapdeal, which competes against Amazon and local rival Flipkart (as well as eBay's Indian site), expects to handle $1B worth of gross sales this year. The company estimates its average transaction cut is in the low-teens.
Separately, eBay has responded to Carl Icahn's latest letter with some fighting words of its own, and an aggressive defense of the company and director/VC Marc Andreessen's handling of the Skype sale.
eBay: "Carl Icahn doesnt let the truth get in the way of a good story. And while his letters and media interviews may be entertaining, they are not factually accurate ... We challenge Mr. Icahn to end his own charade with our shareholders."
Much like the letter he issued on Monday, Carl Icahn 's latest missive to eBay (EBAY +1.2%) shareholders criticizes board members Marc Andreessen (not up for re-election) and Scott Cook's perceived conflicts of interest, calling the directors "value-driven for themselves."
The activist investor once more urges shareholders to vote for his two board nominees, and to back a precatory (non-binding) proposal regarding a PayPal split.
Icahn: "If you ran your own company, would you ever allow your competitors to sit at the table as you planned and executed your business strategy? ... We believe corporate governance at eBay is dysfunctional."
Update: eBay responds to Icahn's letter, and takes a few shots of its own. "Carl Icahn doesn't let the truth get in the way of a good story. And while his letters and media interviews may be entertaining, they are not factually accurate."
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.
eBay (EBAY -0.1%) is open to taking on more debt as long as doing so doesn't affect its credit rating, says CEO John Donahoe. The remarks come after eBay, which has only $3B in U.S. cash, added $5B to its buyback authorization.
Altogether, eBay had $14B in cash/investments at the end of 2013, and $13.4B in debt.
Donahoe reiterates his opposition to Carl Icahn's call to spin off PayPal, but suggests he could eventually change his mind. "If and when synergies run their course we will be rational in the same way we were rational with Skype."
For his part, PayPal co-founder/Tesla CEO Elon Musk has told Forbes (in a cover story about PayPal) he backs a PayPal split. "It doesn’t make sense that a global payment system is a subsidiary of an auction website. It’s as if Target owned Visa or something."
Forbes' story highlights the culture clash between PayPal and eBay, as PayPal chief David Marcus tries to make the payments giant more agile and mobile-focused. Marcus: "It’s a 13,000-person company where we’re changing everything and rewiring the whole culture … At large companies you always find someone with reasons not to do something."
Meanwhile, Donahoe tries to tone down expectations for eBay's Now same-day delivery service (relies on retail partners). "This is not a major independent business line we want to grow." Amazon (AMZN +2.1%) might be happy to hear those remarks.
TechCrunch reports Amazon (AMZN +4.4%) is developing a P2P payments system that would fully bypass banks and payment processors, and represent a further escalation of its challenge online payments colossus PayPal (EBAY +2%).
Separately, re/code reports PayPal is "pitching" Apple on offering white-label services (fraud detection, processing, etc.) for its planned mobile payments service. But two of the site's sources state it's unlikely Apple would have any need for PayPal.
eBay shares sold off on Monday in response to a WSJ report about Apple's payments service. PayPal handled $27B worth of mobile transactions in 2013, up from $14B in 2012.
Both Amazon and eBay's shares have joined a Facebook-fueled Internet stock rally.
Apple (AAPL +1.2%) is rising going into today's FQ1 report, and PayPal parent eBay (EBAY -2%) is selling off, after the WSJ reported Apple is hatching plans for a mobile payments service. Point-of-sale hardware vendors VeriFone (PAY -2.3%) and NCR (NCR -2.6%) are also lower.
The report left some major questions unanswered. A big one: Will Apple's service only cover transactions taking place in physical stores, or will it also cover mobile e-commerce transactions?
The latter would be a much larger threat to PayPal, which handled $27B worth of mobile transactions (largely e-commerce-related) in 2013, but for now only has a small presence in the offline payments realm (the company is trying hard to change that).
Given Apple's history, an Apple payments service is unlikely to support Android. That could limit merchant interest in regions where Android has a dominant smartphone share (the EU, Latin America, parts of Asia), assuming Apple plans to take the service overseas.
Carl Icahn mentioned payments as a major growth opportunity for Apple last week, highlighting the company's ability to leverage its 575M+ iTunes accounts, fingerprint sensors, and iBeacon.
Analysts expects Apple to report FQ1 EPS of $14.09 (+2% Y/Y) this afternoon, and revenue of $57.46B (+5.4%). Gene Munster believes the Street expects 56M-57M iPhone sales, 24M-25M iPad sales, 4.6M Mac sales, and a gross margin of 37.5% (at the high end of Apple's guidance range).
Apple (AAPL) is working to expand its mobile-payments service so that its devices can enable users to buy goods and services, the WSJ reports.
Jennifer Bailey, who managed Apple's online stores, has been given the job of building the company' payment business, while iTunes and App Store chief Eddy Cue has been talking with relevant industry executives.
The report follows Apple patent activity related to mobile payments. With iTunes having 575M registered users, the potential looks rather interesting and the service could pose a serious threat to the likes of PayPal (EBAY) and Square.
Meanwhile, the NYTreports on an interview that Steve Jobs gave in November 1983 to then Rolling Stone reporter Steven Levy, who's publishing the transcript of the conversation to celebrate 30 years of the Macintosh. At the time, Levy left much of the interview out of an article he wrote about the Mac for the magazine.
"It's like computers and society are out on a first date in this decade," Jobs said of the 1980s. "For some crazy reason we're just in the right place at the right time to make that romance blossom."
Carl Icahn's stake in eBay (EBAY) is almost 2%, Reuters reports, more than the 0.82% that the company disclosed this week.
Icahn has told the WSJ that he's prepared to fight a proxy battle in order to win two seats to eBay's board and force the company to spin off PayPal.
To Reuters, Icahn said he prefers a spin-off initially rather than a sale, which could come afterwards. "You do a spinoff tax-free," Icahn tells Reuters. "After that maybe it could potentially be sold at a great premium."
Carl Icahn's spinoff proposal is overshadowing weak fundamentals, says Needham's Kerry Rice, reiterating a Hold on the stock. "We believe a spinoff of the PayPal business is unlikely." The team lowers its FY2014 EPS esimate to $2.97 from $3.05 and sets 2015 at $3.45.
Susquehanna's Brian Nowak also believes a spinoff is unlikely and removes his Buy rating on the stock. "We believe it more likely that eBay stays one company and steps up its investment spending, which limits its potential for higher earnings power."
"While shareholder activism could keep a floor on the share price near-term, we see few compelling reasons to buy the stock at current valuation levels," says Topeka's Victor Anthony, also removing his Buy rating. His team cuts is FY2014 EPS estimate to $3 from $3.15. "Challenges growing the core above e-commerce, challenges monetizing off-line initiatives, and stepped-up investments at Payments, are likely to limit management's ability to post beat and raise results over the next year."
Though Carl Icahn is pushing EBAY to do a PayPal spinoff, the company insists shareholders are better served by the status quo, and justifies its view by pointing to the ties between PayPal and eBay's e-commerce ops.
Icahn's likely reasoning: PayPal is growing faster than the rest of eBay, and its online payments dominance would probably yield a premium valuation in the current environment. PayPal almost certainly accounts for over half of the $70.4B valuation eBay possessed as of today's close.
In Q4, PayPal's revenue rose 19% Y/Y (even with Q3), and accounted for the lion's share of the $1.84B in Payments revenue produced by eBay. Payments volume rose 25% Y/Y to $52B, fueled by 31% growth from non-eBay merchants (boosted by Braintree). Registered accounts rose by 5.2M Q/Q to 143M.
Marketplaces revenue rose 12% Y/Y (also even with Q3) to $2.23B, with GMV (exc. vehicles) rising 13% to $21.5B; the division has been losing share to Amazon. Fixed-price sales now make up 73% of GMV. Enterprise (formerly GSI Commerce) sales fell 2% to $392M.
PayPal and Marketplaces respectively produced $27B and $22B in 2013 mobile transaction volumes, beating prior guidance of $20B. 40% of Marketplaces' Q4 GMV involved "a mobile touch point."
$254M was spent on buybacks in Q4; that figure might grow in Q1. Opex rose 9% Y/Y, slower than revenue growth of 14%.
In tandem with its Q4 results, EBAY discloses Carl Icahn has taken an 0.82% stake in the company, has submitted two board nominations, and is calling for PayPal to be spun off into a separate business.
Perhaps not coincidentally, eBay has also authorized a new $5B buyback, which raises its total authorization to $5.6B (good for repurchasing 7% of outstanding shares).
Q1 guidance is for revenue of $4.15B-$4.25B and EPS of $0.65-$0.67, below a consensus of $4.3B and $0.72. 2014 guidance is for revenue of $18B-$18.5B and EPS of $2.95-$3.00, largely below a consensus of $18.5B and $3.12.