Today: A report from The Information contends eBay is telling some PayPal job candidates that he company may be spun off, pushing stock higher. Also: Earnings reports from Silicon Valley software companies Salesforce and Intuit.
The Lead: eBay now considering spinning off PayPal, report says
Just a few months after fending off activist investor Carl Icahn's aggressive call to spin off PayPal, eBay is bringing up the idea in interviews with candidates for the top job at its payments company, according to a Thursday report.
Two unnamed sources told subscription news website The Information that eBay is suggesting PayPal could become an independent entity within a year while trying to replace David Marcus at the helm of its payments arm. The report juiced eBay's stock Thursday, sending it 4.7 percent higher to $55.89.
PayPal, which eBay acquired for $1.5 billion in 2002, is the fastest growing segment of eBay's business and could soon account for half of the San Jose e-commerce giant's revenues.
Icahn launched a campaign to have the company spin off its online-payments business in January, and reportedly bought up more than $1 billion in eBay stock while publicly attacking CEO John Donahoe and board members such as venture capitalist Marc Andreessen. Icahn's push attracted high-profile backers including PayPal co-founder Elon Musk, who has gone on to found Tesla Motors and SpaceX.
After nearly three months of acrimonious public exchanges between eBay and Icahn, the two sides settled their differences, with eBay nominating an Icahn-approved board member and Icahn agreeing to drop his proposal to split off PayPal.
Even at that time, however, not everyone believed the issue had been put to rest.
"Just because Carl Icahn struck this agreement doesn't mean the issue won't continue and someone else won't carry the mantle," S&P Capital IQ analyst Scott Kessler told this newspaper at the time. "The situation is not completely over."
In a Thursday statement, eBay did not categorically deny interest in a PayPal spinoff, which it had previously described as "not a good idea" in sparring with Icahn.
"The board will continue to assess all alternatives to create that long term (shareholder) value and to enhance the growth and competitive positions of both eBay and PayPal," spokeswoman Amanda Miller said in an email. "This position has not changed."
If eBay were to spin off PayPal, it would not be the first time a Silicon Valley company has fended off the investor's demands only to later follow the suggested path: After Apple denied Icahn's calls for greater investor return of cash, it increased its share repurchases beyond already-record levels earlier this year.
PayPal has been undergoing a transformation in the past year, including the $800 million acquisition of Braintree, which facilitates payments for other companies and came with consumer-facing payments offering Venmo. That acquisition helped fuel a new service introduced this week that allows one-touch payments from mobile applications, which eBay hopes will boost PayPal's adoption by small businesses.
PayPal's leadership changes have not been as positive. Marcus, who was president of PayPal, left for a job at Facebook in June, just a month after the company's new director of strategy, Rakesh "Rocky" Agrawal, departed and subsequently went on a days-long Twitter rant that targeted other executives.
Overall, eBay is the seventh-largest technology company in Silicon Valley in terms of revenues, racking up sales of $16.05 billion in 2013. PayPal accounted for $6.1 billion of those revenues, which would have made it the 16th largest valley tech firm on its own, ahead of such stalwarts as Yahoo and Adobe. In the first half of 2014, PayPal brought in $3.79 billion in revenues, 43.9 percent of eBay's total.
SV150 market report: Salesforce, Intuit release earnings reports
eBay's gains helped Silicon Valley tech stocks outpace a small advance from the larger market, but shares in two large Bay Area software companies headed in opposite directions following their earnings reports Thursday afternoon.
Cloud-software pioneer Salesforce again showed off booming revenues and big losses, and satisfied investors by increasing its projected sales total for the entire year. The San Francisco company revealed a net loss of $61.1 million, or 10 cents a share, on revenues of $1.3 billion, falling from rare profits in the same period a year ago but increasing sales 37.8 percent. Shares gained to near $56 in late trading after closing with a 0.6 percent increase at $55.71. Intuit headed the opposite way after the Santa Clara software company reported a wide net loss as it looks to switch to the cloud platform Salesforce has helped to popularize. Intuit reported a loss of $73 million, or 14 cents a share, on sales of $714 million, and predicted that it will see revenues decline in the just-begun fiscal year due to its cloud transition. Intuit stock fell to less than $85 in after-hours action after closing with a 0.6 percent advance at $85.81.
Hewlett-Packard enjoyed a healthy bump after its earnings report Wednesday afternoon showed the Palo Alto tech giant's first year-over-year revenue gain in nearly three years, rising 5.4 percent to $37. Apple established a record closing high for a third consecutive day, but not by much: The Cupertino company gained a whole penny to $100.58. Facebook declined 0.3 percent to $74.57 while a class-action lawsuit in Europe grew, and LinkedIn increased 0.6 percent to $219.20 before news leaked Thursday afternoon that an important executive is leaving the company.
Up: HP, eBay, Intel, Gilead, Applied Materials, Adobe
Down: Zynga, GoPro, SunPower, VMware, Nvidia, AMD
The SV150 index of Silicon Valley's largest tech companies: Up 10.29, or 0.64 percent, to 1,609.37
The tech-heavy Nasdaq composite index: Up 5.62, or 0.12 percent, to 4,532.1
The blue chip Dow Jones industrial average: Up 60.36, or 0.36 percent, to 17,039.49
And the widely watched Standard & Poor's 500 index: Up 5.86, or 0.29 percent, to 1,992.37