eBay Inc (EBAY - Analyst Report) ended Q4 on a mixed note Wednesday, with sales missing estimates and earnings beating the consensus as the online marketplace announced it would lay off 7 percent of its workforce.

Sales at the San Jose, California-based company rose 8 percent to $4.92 billion from $4.53 billion a year earlier. That was nearly in line with the $4.93 billion Wall Street analysts had been expecting.

Facing disruption in its core business segments, the world’s largest online marketplace will strip out both people and units after a battle over the company’s size with activist investor Carl Icahn. While it initially resisted Icahn’s calls to split eBay and PayPal into separate companies, eBay relented in September and will continue its new less-is-more philosophy in 2015.

The plan to spin off PayPal will be completed in the second half of 2015, president and CEO John Donahoe said in a statement Wednesday. New active registered accounts for the electronic payment service grew by 4.6 million users in the fourth quarter, with revenue rising to $2.2 billion.
 

eBay Results

Despite “unexpected events and distractions,” Donahoe said, the company finished the year with solid earnings growth. Net income in the fourth quarter rose to 81 cents per share from 66 cents per share a year earlier, based on Zacks data. That beat the 77 cents per share projected by the Zacks Consensus Estimate, which excludes stock options and non-recurring expenses.  

In addition to PayPal, Donahoe added that the company will explore new options for eBay Enterprise, including a sale or IPO. “It has become clear,” he said of Enterprise, “that it has limited synergies with either business and a separation will allow both to focus exclusively on their core markets.” The move would mean eBay splitting into not just two but three companies in 2015.
 

Job Losses

eBay will also make some major personnel changes in the coming year. In the first quarter, the company will cut 2,400 jobs, about 7 percent of its workforce, across all three of its major units. With the marketplace division preparing to stand alone, a leaner workforce could make the smaller company a more attractive takeover target, the Wall Street Journal reported earlier Wednesday. Alibaba (BABA - Analyst Report), Google and Amazon (AMZN - Analyst Report) are all potential acquirers for both eBay and the new PayPal, analysts expect.

While some employees are heading out the door, eBay will also take on two new board members. The company announced it had entered into a standstill agreement with Carl Icahn. Icahn Capital executive Jonathan Christodoro will be appointed to eBay’s current board of directors, and Icahn will also be allowed to choose which board Christodoro serves on when the company completes its planned separation. Two other executive will also join board in 2015, bringing the total number of directors to 15.

In after-hours trading, eBay shares rose 2.6 percent, to $54.75 from $53.38. The company currently holds a Zacks Rank #4 (Sell), reflecting what will surely be an eventful year ahead.