Ebay lays out post-split vision for marketplace and PayPal

Ebay on Wednesday tried to lay out a stronger long-term business case for its core ecommerce and payments businesses as it set a summer deadline for their separation in a seminal corporate break-up.

Meanwhile, signs of stabilisation in its struggling ecommerce operations brought some relief to long-suffering investors, prompting a 5 per cent bounce in its share price in after market trading.

The US ecommerce company said it planned to move ahead with the separation of its PayPal division from its original ecommerce business during the third quarter, and that it was still exploring a sale of its separate enterprise business.

The pending split has raised expectations on Wall Street that PayPal will become a takeover target as other big tech companies move into the payments business. The speculation has also been fuelled by concerns that the online payments unit, which grew to prominence in the PC world, risks being outflanked by new mobile payments ventures such as Apple Pay, adding to pressure for a deal.

In a conference call with analysts on Wednesday, Dan Schulman, who is set to become chief executive of PayPal after the split, said the company was on the verge of "one of the greatest opportunities for growth the payments industry has ever seen". PayPal said the number of mobile transactions had grown by 40 per cent in the past year and now accounted for 30 per cent of its activity.

The merging of offline and online commerce, thanks to the prevalence of mobile devices, was about to expand the potential market tenfold, to $25tn, Mr Schulman said.

Meanwhile, Devin Wenig, head of eBay's marketplaces division, said the ecommerce business had embarked on a long-term project that would free it from the volatility caused by its vulnerability to changes in Google's search algorithms. Ebay blamed a decline in ecommerce growth last year largely on a shift at Google, which reduced traffic to its website.

The company was turning its product listings into a structured data set that would make the information more discoverable online and less exposed to changes at Google, Mr Wenig said.

He claimed that this would give the business "a more robust platform" and put it in a stronger position as an independent company to improve experiences for buyers and sellers, though the changes would take years to complete.

Ebay executives pointed to results from the first quarter as a sign that the ecommerce business had stabilised after search engine problems and a security breach last year that resulted in users being required to reset their passwords.

Gross merchandising volume on the site fell 2 per cent but would have risen 5 per cent had it not been for the stronger dollar, pointing to an end to the decline.

Revenue for the first quarter rose 4 per cent to $4.45bn, slightly ahead of expectations, while pro forma earnings per share of 77 cents compared to forecasts of 70 cents. On a reported basis, eBay had net income of $626m and earnings per share of 51 cents, compared with a net loss of $2.3bn a year before caused by a tax charge prompted by the potential repatriation of its overseas cash.

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