The Billion-Dollar Battle Over eBay Heats Up

A man worth an estimated $23.3 billion has been fighting eBay (NASDAQ: EBAY  ) for months, but a recent letter shows things just got personal. Very personal.

Image source: Insider Monkey.

Carl Icahn is a noted activist investor who sits as the head of Icahn Enterprises (NASDAQ: IEP  ) . He battled for a $50 billion share buyback effort at Apple, delivered a staggering 450% return on his investment in Netflix, and has famously stood against the case that fellow billionaire Bill Ackman made for the downfall of Herbalife.

Yet in perhaps the most heated battle of his long investing career, Icahn has taken a staunch position against eBay, which he owns 2.2% of, and its future direction as guided by management. He went so far as to call eBay CEO John Donahoe a man of "inexcusable incompetence" who has "cost eBay stockholders over $4 billion."

Three letters in seven days
For the third time in seven days, Icahn has released a scathing letter addressed to fellow shareholders of eBay denouncing the management practices of the popular online retailer and parent of PayPal.

He has questioned the company's decision to sell Skype to investors headlined by Andreessen-Horowitz -- whose director, Marc Andreessen, also sits on the board of eBay -- in September 2009 for $1.9 billion in cash. Yet just 18 months later, in March 2011, Skype was sold to Microsoft for a staggering $8.5 billion, to which Andreessen noted; "This is one of the best-performing buyout deals of all time. To get this kind of return on a buyout deal in such short time is really rare." 

There were legal issues swirling around Skype, and Icahn suggests one of the reasons the Skype founders agreed to the original sale was they hadn't been given the same amount of information provided to Andreessen-Horowitz and the other buyout firms about how quickly and easily the issues could be resolved.

Those issues were cleared promptly following the sale of Skype to Andreessen-Horowitz, and Icahn believes that "Donahoe chose to sell a controlling interest in Skype to Andreessen's investor group, allowing them to reap billions at the expense of eBay and its stockholders, rather than cleaning up the licensing issues and then pursuing a more lucrative exit, such as an IPO or a sale to a strategic buyer."

Icahn adds, in his most critical comment of Donahoe:

Stockholders must consider whether Donahoe is either incompetent or negligent or, perhaps even worse, was simply taking the easy path of bowing to the wishes of a respected and powerful board member. At any rate, this failure cost eBay stockholders over $4 billion.

Image source: Insider Monkey.

The notable responses
Yet the fight has not been met without a response from Marc Andreessen, who has published five blog posts since March 3. In those posts, he has said, "I dispute all accusations that I have violated any of my duties to eBay shareholders." He later added, "Mr. Icahn is making up a fake conspiracy theory out of thin air." 

eBay itself has said that "[n]ew eBay shareholder Carl Icahn has cherry-picked old news clips and anecdotes out of context to attack the integrity of two of the most respected, accomplished and value-driven technology leaders in Silicon Valley." The company went on to affirm that it would oppose his efforts to spin off PayPal.

eBay's board of directors also rejected Icahn's effort to have two of his employees nominated to its board, saying, "neither nominee has relevant experience or expertise." The firm also noted of the most recent letter,"[i]n pursuit of his own profit motives, Carl Icahn has made another unsubstantiated attack on John." 

The final conclusion
Icahn began his initial battle by fighting for the separation of eBay and PayPal, but things have gotten much more fierce, as he concludes his most recent attack by saying he has no intention anytime soon of ceasing his letters and release of information denouncing current management.

This battle is probably a long way from over, and investors on either side of Icahn should be prepared for the reality that the victor of this war may not be decided for months, or perhaps even years.

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  • Report this Comment On May 11, 2014, at 1:45 PM, groitswitch wrote:

    I Have just had possibly one of the most frustrating and unpleasant experiences of my entire life tryiing to get a point across to ebays customer services.

    I am no investor, i have no capital to invest , this week at least as ebay has made sure of that, from the insane language of the seller menus on the site, the hoop jumping, the total farce of it all, the aggressive buyers who wield ebays rules like a weapon, the total idiocy of having customer services that are little more than puppets with a list of platitudes seemingly designed to infuriate.

    It WAS an auction site. what donahoe did to it and its users he should not only be fired for but most probably hung for his crimes.

    Ebay became what it was because of its auction format, anyone could sell anything and get what it was worth, ebay went insane a long time ago- about 2008 in fact... and all the profits are all in mr donahoes pockets.

    IT AND HE IS NOW JUST A MASSIVE EGO...as thats all it has in reality ,

    its now trading on a name that gets WORSE AND WORSE BY THE DAY .

    JOHN DONAHOE is.. in reality... the original, the one THE only PAYPARASITE.

    lets see him keep his job with that name.

    As a hobbyist seller who used to turn to ebay in times of need???

    I shant ever be using it again and i advise you to do the same.

    ebay is dead whilst this man is at The helm.

    yours truly.

    joe the scrapman and oddities hobby dealer

    who doesnt do it anymore because the website that spawned his cottage RECYCLING industry has now committed suicide in order to fill donahoes pockets.

    If he reads this i hope he jumps out his penthouse window from the shame of what a misguided greedy tw@t he is.

    Basically JOHN DONAHOE THE PAYPARASITE HAS SUCKED THE BLOOD FROM THE VERY SOUL OF EBAY AND IS VERY RICH BECAUSE OF IT.

    MOST EBAY SELLERS WOULD LIKE TO SEE HIM PUBLICLY EXECUTED TO BE FRANK. (METAPHORICALLY OF COURSE)

    EXCEPT THE BIG RETAILERS WHO HAVE TAKEN OVER THE SITE...THE LISTINGS DONT EVEN LIST THE THINGS YOU WANT ANYMORE...SEARCH FOR CARS ??

    YOU GET FUNNELED TO A SHOP WHER THEY SELL OIL AND DUSTERS???

    ITS INSANE

    JOHN DONAHOE IS INSANE,

    THE BOARD OF EBAY IS INSANE.

    BILLION DOLLAR TRADE?

    NOT IF EBAYS NAME IS MUD.

    THE SELLERS HAVE BEEN LAMENTING THE DEATH OF EBAY FOR TWO OR THREE YEARS ALREADY!

    IT WONT BE WORTH TEN CENTS IF THEY DONT GET THE LOONEY OFF THE HELM!!!

    AND PAYPAL IS FECKED... MR ICAHN IS RIGHT THEY SHOULD SPILT THEIR FATES NOW OR EBAY AND EVERYTHING IT EVER WAS WILL SINK WITH IT.

    VISA-M IS COMING AND THE MASTERCARD ONE THEN THERES ALL THE CRTYPTOCURRNCIES...

    WHY PAY TO MOVE MONEY WHEN ITS FREE OR NEARLY FREE FROM ANOTHER SOURCE???

  • Report this Comment On May 11, 2014, at 2:01 PM, groitswitch wrote:

    iF ANYONE NEEDS PROOF OF MY CLAIMS I HAVE 22 HRS SOLID OF CHAT LOGS WITH A CUSTOMER SERVICE DEPT THAT DOESNT EVEN APPEAR TO LOG CONTACTS SO YOU JUST GO ROUND AND ROUND AND ROUND IN A LOOP.

    ITS TOTALLY FOOKKING INSANE.

    IT WILL DRIVE YOU INSANE IF YOU TRY AND USE THE SITE!

    IN THE UK THEY HAVE THIS BESPECTACLED GRINNING MAN WHO LEERS AT YOU THROUGH THE SCREEN LIKE SOME WEIRD PET PSYCHOPATHIC MASCOT...ONE EVERY PAGE

    THEIR SITE IS STRANGE...THE THINGS IT THINKS YOU MIGHT WANT TO BUY ARE UNNERVINGLY WEIRD AND OUT OF TIME.

    IT SEEMS TO LIKE TO REMIND CONSTANTLY OF THINGS YOU CANNOT AFFORD...IM TRAWLING AUCTIONS FOR OLD SOLAR PANELS AND I CANNOT ESCAPE INSTALLER ADVERTS???

    THOUSANDS AND THOUSANDS OF THEM, THEY WILLL ALLOW ANY FAD OR TREND TO BE SHAMELESSLY PROMOTED TO PEOPLE WHO COULDNT GIVE A SH!T,,,ITS AWFUL, THE PAY FOR CATEGORIES THING IS THE WORST.

    IT TOTALLY AND ABSOLUTELY RUINS THE EXPERINCE OF ACTUALLY FINDING THE THING YOU WANT!

    THEIR SERVERS ARE SLOW,THEIR MENUS ARE WEIRD THEIR SEARCH FUNCTION IS SH!T...ITS AN ABSOLUTE T@RD OF A WEBSITE.- SO BAD IN FACT THAT I THINK IT IS USED IN COLLEGES AS AN EXAMPLE OF HOW NOT TO DO A WEBSITE.

    ITS WRITTEN AS THOUGH ITS FOR PEOPLE WHO NEVER USED A WEBSITE BEFORE...

    ENDLESS WALKTHROUGHS AND HANDHOLDING AND THIS CONSTANT AIR OF SUSPICION THEY PUT ON SELLERS AS THEY SEEM TO QUITE LIKE THE SHYSTER SELLERS SO LONG AS THEY ARE TOTALLY DECEITFUL AND THEY LOVE OBSTINATE UNREASONALE BUYERS FOR SOME REASON.

    ITS SH!T BUT IT USED TO BE THE BUSINESS- AUCTIONS ARE BOOMING EVERYWHERE ELSE BUT EBAY BUYERS AND BIDS ARE THIN ON THE GROUND THESE DAYS.

  • Report this Comment On May 11, 2014, at 2:07 PM, groitswitch wrote:

    http://ebaystrategies.blogs.com/ebay...cot-wingo.html

    An excerpt from an interview of Devin Wenig by eBay gatekeeper Scot Wingo …

    Devin: I’m blown away by Amazon; the scale of their ambition is breathtaking. The world isn’t going to be EBay or Amazon it will have both. They’re great and we’re great; and we can both be great. [Dream on, Devin]

    Scot: How has eBay dramatically turned its business around? [This is a serious question?—LOL]

    Devin: We’re proud of where we are but we’re not satisfied. We have loads of issues. I think there are a lot of basics that needed fixing – there are phases: Phase I – it was making the experience better for existing buyers; Phase II – is about innovation/new customers. We’re 1 year into this phase. It’s about how do we become the most important marketplace in the world. It’s about connecting new buyers to the marketplace. We’re bringing in new demographics, ages, geographies. Going forward: more innovative, bigger bets, pushing the break through the seller/buyer experience. We’re at 116 Million users. We want to roughly double that this year, and we think we will. They are younger, emerging markets. They skew more female which is great for fashion categories. …

    Obviously, Wenig is delusional. The reality is, in the sixth year of Donahoe’s three-year turnaround of eBay, the eBay marketplace continues to atrophy—and “we have loads of issues”? Well, Wenig certainly has that right—and all self created! For the rest of it, including most of the nonsense (mobile, mobile, mobile, etc) in the above linked ebaystrategies blog transcript (it’s a great read if you are looking for a good laugh): the greatest load of disingenuous nonsense ever to spew from the eBay Dept of Spin, Spin, Spin, and More Nonsensical Spin … You’ll also notice that the eBay gatekeeper Scot Wingo no longer takes comments on his blog; I wonder why? [Wow, a comment of mine appears to have momentarily slipped past the moderator! Or, maybe it’s just links to detailed criticisms that they don’t appreciate?]

    “The band continued to play on, even as the bow dipped lower and lower.”—The Titanic/eBay Story

    Still, one thing we can always be sure of, whenever an eBay spokesperson’s lips are moving—they are being disingenuous, and in the cases of John Joseph Donahoe, Devin “Little” Wenig and PreyPal’s David Marcus, delusionally so …

    Last edited by PhilipCohen; 07-24-2013 at 11:14 PM.

    AND THERES THE BIG BUSINESS WATCHERS SCOOP ON IT TOO.

  • Report this Comment On May 11, 2014, at 2:09 PM, groitswitch wrote:

    MR DONAHOE??? YOU ESSENTIALLY JUST GOT FIRED BY AN ANONYMOUS SCRAP DEALER YOUR BEHEMOTH CORPORATION JUST RAN OVER FOR THE LAST TIME.

    YOU ARE THE PAYPARASITE.

  • Report this Comment On May 11, 2014, at 2:23 PM, groitswitch wrote:

    Now i got that rant out of my system i genuinely came here straight from the ebay site after finally losing my cool with them.

    Down in the engineroom and forums of ebay it is much the same story, the inclusiveness of ebay -its greatest strength -has been totally destoyed, thee electronics geeks hang on to it because it is the original marketplace for such things- its first item was a laser pointer i believe but when they look around them and see the craft workers and mechanics and used car dealers have all left or just use the site as an advertising platform and the prices are cheaper on their own sites.

    using ebay these days is a hunt for a telephone number to the seller...fire him a message over ebay to give them the credit for the lead(if you are feeling generous) then cal the sleer direct, what ebay forget is the personal relationship with a seller is what is important- the website just a medium, one that sellers will happily pay a fee for...or they used to...before the big guns came in and ruined the search- favoured a few quid on price for substandard product meaning their returns processes got complicated.

    sold as seen..thats me...describe it well..if i lied which i dont then you can have your money back..simples..

    100 percent feedback? then frankly i dont trust that the product will work but you will return it quick lol.

    98 percent feedback? theres the guy you want to deal with...

  • Report this Comment On May 11, 2014, at 3:08 PM, groitswitch wrote:

    john donahoe? well the wrappers shiney it says 14.3 billion on it 100% feedback.

    shame the jar is empty.

    from the perspective of someone who used to use ebay to recycle upcycle and reuse stuff, give people a bbargain make a few quid etc. not even for profit really...used to be acommunity...a few poor souls hang on but their friends hve left...just a bunch of shifty chancers now it seems they come to buy stuff and want money off for things you already described as busted?!

    i can safely say mr donahoe took the fun right out of it, you used to be able to offer your friends a service and shift their kit too.now because of the lack of trust in the fleabay feebay payparasite name they dont want to know...theyve had their time wasted already.

    they should fold up gumtree and offer free listings for second hand goods , no fees for stuff worth less than fifty quid.

    and just get rid of the endless options and attached fees.

    in fact they should ghet me to run it...il do it for a couple of grand for a day and fix more than this donahoe clown did in three years...apart from fixing to line his own pockets that is.14.3 million to piss off the base users and miss a massive invetment in skype?? i mean who the eff would sell that??

    it was a noun from the off?

    it practically owns estonia as well if im not mistaken- the only economic groth story in europe...ah probably because donahoe wasnt in charge of it...hed have run that into the ground to make few quick bucks too i expect.

    it defined a technological concept did skype

    you know like hoover??

    to not see that coming is only the action of a retard.

    like it would fail? had a stab at bringing down some phone companies too did skype it was that good.

    like ebay?? the name ???

    oh ill ebay it?

    ill skype them?

    ill just run the hoover round?

    its the only reason they still have any money is the fact they are embedded in our language.

    well now so too is payparasite.

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