eBay Inc (EBAY) Earnings Solid, Shares Surge On Carl Icahn’s Stake

eBay Inc (EBAY) Earnings Solid, Shares Surge On Carl Icahn’s Stake
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eBay Inc (NASDAQ:EBAY) shares rose as much as 9% after the company’s earnings report—and news of a major stake in the company taken by activist investor Carl Icahn. eBay reported revenue of $4.5 billion for the December quarter—a 13% increase over the same quarter a year ago. GAAP net income was 65 cents per share, and non-GAAP net income was 81 cents per share.

Analysts had been expecting the company to report earnings of 80 cents per share on revenue of $4.56 billion.

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Examining eBay’s earnings results

eBay Inc (NASDAQ:EBAY) reported a 22% increase in total company enabled commerce volume during the December quarter. For the full year, the metric rose 21%. eBay Marketplaces and PayPal both achieved record mobile results in 2013, with each passing $20 billion in mobile volume. Mobile users made up 40% of eBay’s 36 million new users and accounts during the year.

PayPal’s revenue increased 19% in both the December quarter and the full year, climbing to $6.6 billion in 2013. The segment reported 5.2 million new active registered accounts in the quarter and ended the year with 143 million. Total net payment volume increased 25% during the quarter with 3 billion transactions. Total mobile payment volume was $27 billion.

Marketplaces saw its gross merchandise volume excluding vehicles increase 13% in both the quarter and the full year, hitting $76.5 billion in 2013. eBay reported strong growth particularly in its domestic business. Revenue for the division increased 12% in both the December quarter and the full year, hitting $8.3 billion during the quarter. Marketplaces added 4.6 million active users during the quarter, ending the year with 128 million. The U.S. business increased 14% during the quarter.

eBay Enterprise also increased, generating $1.8 billion in merchandise sales during the fourth quarter and $4.2 billion for the full year. That’s an 11% increase for the quarter. The division generated $1.1 billion in revenue for the full year.

eBay Inc (NASDAQ:EBAY) also closed its acquisition of Braintree during the December quarter. In addition, it bought back $254 million of its shares during the quarter.

Carl Icahn wants eBay to spin off PayPal

Carl Icahn’s reported stake in eBay Inc (NASDAQ:EBAY) is still rather small at nearly 1%. However, he does appear to have activist intentions as he has nominated two directors for election to the auction site’s board. Icahn also submitted a non-binding proposal suggesting that eBay spin off PayPal.

eBay Inc (NASDAQ:EBAY) responded to Icahn’s proposal, saying that after exploring a spinoff in depth, its board has decided that shareholders are best served “by the current strategic direction of the company” and doesn’t think breaking off PayPal is the best way to maximize value for shareholders.

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