In January, eBay received a strongly worded letter from activist investors Elliott Management, outlining a way forward for the company that Elliott saw as floundering. Two weeks ago, the company announced it was restructuring operations and laying off some of its workers. Today, the company announced further steps toward reorganizing, much of which sounds straight out of Elliott’s letter earlier this year.
In the January letter, among other things, Elliott suggested the company lacked operational discipline and it believed that with some tweaking, it could get much better stock performance. “Today eBay suffers from an inefficient organizational structure, wasteful spend and a misallocation of resources,” Elliott wrote at the time. At the same time, Elliott encouraged the company to concentrate on what it saw as its primary value proposition as an e-commerce marketplace. That meant getting rid of any pieces that didn’t serve that mission, including StubHub, the online ticket selling marketplace.
Perhaps it’s not surprising then that today’s announcement indicates the company is going through a review of operations and taking stock of its assets, including StubHub. “These initiatives include an operating review and the commencement of a strategic review of the Company’s portfolio of assets, including StubHub and eBay Classifieds Group. eBay has worked collaboratively with Elliott Management, Starboard Value, and other significant shareholders on these initiatives, which include the addition of two new independent directors to the Board,” eBay indicated in the announcement.
These new board members include Jesse Cohn from Elliott Management and Matt Murphy from Marvell Technology, as the company begins to shift its focus.
The company announced earlier it was also moving the online marketplace, the key strategic asset of the company, according to Elliott, under a single global management team instead of the regional approach it had been taking. The company also announced plans to increase the advertising budget for the marketplace, according to the release.
These moves come as eBay tries to find a way to increase shareholder value to please activist investors like Elliott Management and Starboard Value. In a statement, Devin Wenig, company president and CEO, tried to put the best face on these changes. “The bottom line is that we all share common ground: we see tremendous opportunity ahead and want to see eBay’s full potential realized over the long-term. The initiatives we are announcing today are the result of this constructive dialogue,” he said.