Today: After nearly two months of back-and-forth, Carl Icahn suggests eBay should sell just part of PayPal in an initial public offering, but gets another denial. Also: Stocks fall after Fed changes language in interest rates, Oracle dips after earnings.
The Lead: Carl Icahn suggests PayPal IPO, eBay sticks to its guns
Activist investor Carl Icahn toned down his harsh language toward eBay on Wednesday, pulling back from demands for a full PayPal spinoff to suggest an initial public offering that would allow the San Jose e-commerce giant to retain 80 percent of its online-payments company. eBay's response: Thanks, but no thanks.
The back-and-forth between Icahn and eBay began with the company's January earnings report, when eBay reported that Icahn had invested in the company and nominated two of his employees for eBay's board of directors while proposing a spinoff of PayPal. Since then, Icahn has openly and aggressively denigrated the company's CEO and board, mostly focusing on the sale of Skype to a group of investors that included Andreessen Horowitz, the venture capital firm that includes eBay director Marc Andreessen.
eBay has fought back with increasingly confrontational blog posts and responses from outside parties, while weathering a storm that has moved so far afield that one analyst suggested the best possible move would be a Google acquisition of eBay.
Icahn toned down his language Wednesday in another missive that offered a compromise: Sell 20 percent of PayPal in an IPO, while signing a deal that ensures that the synergies between the two companies that benefit PayPal remain after the stock sale.
"A 20% IPO of PayPal could allow for all of the benefits of an independent PayPal, preserves all of the benefits of keeping PayPal in-house and could be structured so as to be tax free to shareholders," Icahn wrote.
Late in Wednesday's trading session, eBay responded with a blog post that likewise avoided a confrontational tone, but still refused to go down Icahn's suggested path.
"A partial separation of PayPal is not a new idea, and we're glad to see that Mr. Icahn now seems to agree that a full separation of PayPal is not a good idea," the company's blog post read, while continuing to shoot down the partial IPO.
"We've asked ourselves: Will a partial spin make PayPal more competitive? Will it accelerate growth? Will it be possible without distracting PayPal at a critically important time? And, importantly, will it create sustainable value for shareholders over time? Today, we believe the answer to these questions is no."
Part of Icahn's pitch is more transparency on PayPal's financials, which he believes would help investors and analysts, but Wedbush Securities analyst Gil Luria, who covers eBay, did not agree with that stance.
"He says analysts can't analyze the business properly, and a partial IPO would help," Luria told Marketwatch. "The truth is we know the revenue numbers and we have all we need to do our jobs."
eBay's stock fell toward the end of Wednesday's trading session, about the time the company's response was released, and ended the day with a 0.9 percent decline at $57.30.
SV150 market report: Wall Street declines after Fed announcement
eBay was not alone in Wednesday's decline, as Wall Street suffered in the afternoon session, after new Federal Reserve Chair Janet Yellen spoke about the central bank's plans, which include unbundling short-term interest rates from the unemployment rate and more cuts in bond purchases. Silicon Valley stocks outperformed the larger indexes but still suffered a decline as Oracle, Adobe and SolarCity fell following their earnings reports.
Oracle fell 0.8 percent to $38.55, bouncing back from larger declines as analysts debated about the biggest take-away from the Redwood City software giant's earnings report, which showed gains from last year but still missed some expectations. Adobe added more subscribers to its cloud-software offering than expected and beat financial expectations, but the San Jose company's shares still fell 1.3 percent to $67.63. San Mateo's SolarCity suffered the most severe tumble, declining 5.7 percent to $72.70 after its delayed report showed a profit that was mostly provided by a tax benefit.
Facebook and Google both fell despite an eMarketer report that predicted the online-advertising industry would grow 75 percent in 2014 to $31.5 billion, mostly thanks to the efforts of the two Silicon Valley companies. Google declined 1 percent to $1,199.25 after a judge refused to accept class-action status for a lawsuit dealing with Gmail privacy issues, and Facebook fell 1.4 percent to $68.24 while continuing to prepare for the debut of video advertising on the social network. Facebook rival Twitter gained 0.2 percent to $51.24 while reportedly ditching plans to encrypt direct messages on its service, and fellow social network LinkedIn jumped 2.1 percent to $201.95 while exploring the creation of internal job boards for companies.
Hewlett-Packard enjoyed its second consecutive day of strong gains, rising 3.5 percent to $31.62 as Autonomy's founder accused the Palo Alto tech giant of lying to its shareholders ahead of Wednesday afternoon's annual meeting. Redwood City video game company Electronic Arts lost just a penny to close at $30.23 amid reports that one of the company's websites was compromised, allowing hackers to access Apple IDs for users; Apple also held relatively steady Wednesday, dropping 14 cents to $531.26. Pandora Media fell 0.2 percent to $34.91 after announcing an increase in subscription prices Tuesday afternoon, and Netflix fell 16 cents to $420.09 after announcing a new sitcom with two well-known actresses.
Up: HP, Advanced Micro Devices, Juniper, LinkedIn, SunPower, Nvidia, Sandisk, Intel, Applied Materials, Symantec, Twitter
Down: SolarCity, Zynga, Yelp, Yahoo, Workday, Salesforce, Tesla, Gilead, Facebook, Adobe, Google, NetApp, eBay, VMware, Oracle, Intuit
The SV150 index of Silicon Valley's largest tech companies: Down 6.71, or 0.43 percent, to 1,557.67
The tech-heavy Nasdaq composite index: Down 25.71, or 0.59 percent, to 4,307.6
The blue chip Dow Jones industrial average: Down 114.02, or 0.7 percent, to 16,222.17
And the widely watched Standard & Poor's 500 index: Down 11.48, or 0.61 percent, to 1,860.77
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.