eBay Inc (NASDAQ:EBAY) President and CEO John Donahoe spoke with FOX Business Network’s (FBN) Maria Bartiromo about billionaire investor Carl Icahn’s comments on splitting up eBay and PayPal. In an interview on Opening Bell with Maria Bartiromo, Donahoe discussed Icahn’s comments that corporate governance at eBay is the worst he’s ever seen, and when asked whether this has caused disruption within eBay, Donahoe said, “Not much at all. We know this is sort of the antics that Carl uses and that’s fine, he does what he does.” Donahoe went on to address whether eBay is on solid ground in corporate governance, saying, “Absolutely, we’re on very solid ground and we’ll respond factually without a lot of theatrics.”
EBay CEO responds to Icahn’s call to spin off PayPal
EBay and PayPal are stronger together
On whether billionaire investor Carl Icahn’s comments that corporate governance at eBay is the worst he’s ever seen have caused disruption within eBay:
“Not much at all. We know this is sort of the antics that Carl uses and that’s fine, he does what he does. Our focus is doing what we want and what shareholders, the other large shareholders, want us to do, which is stay focused on innovating and executing in the market. That’s the best way to drive shareholder value. That’s what I’m doing. That’s what we’re doing.”
On whether eBay is on solid ground in corporate governance:
“Absolutely, we’re on very solid ground and we’ll respond factually without a lot of theatrics. What I’m focusing on is what our investors want me and my management team to focus on, which is our customers, which is on innovation, which is on strong execution so that we grow our business and strengthen our competitive position.”
On whether Icahn is calling as much as he’s putting out these letters publicly:
“No, we’ve had, you know, some regular periodic dialogue, but my focus is on talking to Carl, to our other large investors, but most importantly doing what our investors want, which is driving the business.”
On whether Icahn is just creating a stir so that the stock moves:
“Well, I can’t comment on the sideshow that’s created with what Carl does. What I can comment on is what I’m doing and what our leadership team is doing, which is staying focused on the business. That’s what our customers want. That’s what our employees want. And that’s what our shareholders want.”
On whether he has met with Icahn:
“I meet with all of our large investors on a regular basis and I have met with Mr. Icahn, as I have other large investors. And what investors care about is what path will enable eBay to drive the greatest success in the market and greatest shareholder value over time. And that’s what I’m focused on.”
On why he rejected the split between eBay and PayPal:
“The board and I look every year about how do we drive the greatest value for the company. And over the last five years we believe that eBay and PayPal together make each more successful and drive greater growth. And there are specific synergies between the two businesses. For instance, take mobile commerce: mobile is probably the most important platform shift that’s happened over the last five, 10 years. When mobile came on, we invested heavily in mobile and eBay mobile took off. In PayPal, in 2010, PayPal had 600 million dollars of mobile payment volume, 90 percent of which – 80 percent to 90 percent of which was on eBay. So PayPal’s mobile payment flywheel got started on eBay Inc (NASDAQ:EBAY). Three short years later PayPal’s did $27 billion of mobile payments while in 2013 – that’s almost a 50-times increase – and that flywheel got it started on eBay, which now enables PayPal to drive mobile payments off eBay. We see that time and time again where PayPal, in new key areas, gets started on eBay, which then allows it to grow faster off of eBay.”
On whether eBay and PayPal together is enabling both businesses to grow more than if they were separate:
“Absolutely. Let me give you another example. This is the era of big data. Everyone wants more data; more data is good. PayPal’s ultimately – the secret sauce of PayPal is its risk management capabilities. PayPal guarantees a transaction for consumers and for merchants and anyone that understands risk management knows more data is better. And we have $210 billion of closed transaction data which enabled PayPal to make better risk decisions, which gives consumers safe and convenient payments while making merchants safe as well.”
On whether PayPal would be able to do business with other companies:
“Yes. Another way of saying that is PayPal is able to do business with all other companies other than eBay, but the synergies with eBay are the strongest synergies you’ll find with PayPal in any other company.”
On having Scott Cook and Marc Andreessen on the board:
“EBay has got a world-class board. And one of the ways you put together a world-class board is you get people that have relevant experience and relevant expertise. And in technology that’s essential. And conflicts will arise; that’s true in technology, that’s true out of technology and the simple practice is if a potential conflict arrives, that board member recuses himself. Marc recused himself throughout the Skype process. So Marc has added enormous value to eBay’s board. Scott Cook has added enormous value to eBay’s board and that’s one of the ways we drive shareholder value…. good governance is something we practice every day and the real – that’s not hard. What’s hard is to keep a strong focus on growing the company, innovating, executing in the market, so that we can drive great growth and great shareholder value and that’s where my focus is.”
On investing in China:
“eBay Inc (NASDAQ:EBAY) and PayPal have a huge business exporting out of China. What eBay and PayPal do is they connect the Chinese sellers with 140 million buyers all over the world. Again, stronger together.”
On whether there were any bidders when he sold Skype:
“Yes, we had two bidders and we sold it to the highest bidder at the time. We looked at all options and alternatives, including IPO, looking the strategics, looking at other bidders. So the whole thing is ironic because Mr. Icahn was saying we should separate the company; we weren’t being open-minded about that. And the first thing I did as CEO, is I came in and I looked at our whole asset, our whole portfolio and said how do we drive greatest value for shareholders? And at that time we determined Skype didn’t have synergy, and so even though it was the highest portion part of our – highest growth part of our portfolio, we divested it. We said eBay and PayPal have greatest value together. And so we’ll continue to look at our portfolio in the same way and if and when the same thing occurs, we’ll act rationally.”
