Sunday - Sep 24, 2017

EBay bring some cash back to the States

EBay bring some cash back to the States

Online auction business giant EBay are reportedly getting ready to transfer some of the profits they have earned outside of the United States back into the country. According to unofficial sources the company will be using the funds to finance a planned acquisition and expansion drive, which will see them greatly increase their footprint in the mobile payment sector, which they hope to eventually dominate through their PayPal division.

Ebay, may be seen the writing on the wall as far as money transfer to traditional online methods, which caused them to forecast lower-than-expected earnings for the current quarter, which may have been affected by increasingly growing competition in the Smartphone payments market.

In a recent interview John Donahoe, CEO of EBay, stated that the company ended the first quarter of 2014 with cash and cash equivalents as well as non-equity investments of just under $12 billion, although only $2.2 billion of that income generated in the United States. Add that to the $3 billion non-cash tax charge that the company claims in the first quarter, means that eBay will have around $6 billion available in United States for future acquisitions.

Donahoe went on to point out that of the company’s most recent acquisitions, two thirds of them were of companies based in the United States, which means that it makes more sense to increase the company’s cash holdings in the U.S.

EBay has been under pressure recently from activist investors Carl Icahn, who was using the considerable financial power at his disposal to pressurise the company in spinning off PayPal as a separate entity. In recent weeks, Icahn has been seen to back down on the idea, probably as a result of failing to gain sufficient support from fellow eBay investors.

In his interview Donahoe emphasised that Icahn’s campaign to spin-off PayPal did not in any way influence eBay’s decision either to repatriate foreign earnings or to seek acquisitions in the U.S, which would remain consistent with the company’s policies in the past, pointing to the 2013 acquisition of Braintree, a payment gateway enterprise as a classic example.

John Donahoe summed up his recent interview by stating that by observing what is happening in the world of commerce and payments, EBay continuously assesses opportunities in order to ascertain where we think it will be strategically and financially valuable to extend our platforms.

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