Starboard’s Portfolio Manager Peter Feld said the current board had trouble making big decisions, as illustrated by its inability to find a CEO after eBay’s performance issues. Former CEO Devin Wenig left the position in September, citing conflicts with the company’s board.
Starboard also criticized eBay for moving too slowly when attempting to sell its classifieds business, which Starboard felt was competing with the company’s main business. In February, Starboard Value sent eBay a letter asking that they get rid of their classifieds unit.
“While we hope and expect to continue an open and constructive dialogue regarding ways to create value at eBay, we feel it is important to share our views publicly in order to voice the concerns of the broader shareholder base and to ensure that both management and the Board are aware of these concerns,” the letter said. “We continue to believe that eBay is deeply undervalued and that significant opportunities exist to create value for the benefit of all shareholders based on actions that are within the control of management and the Board.”
Starboard said the company should focus on its core business to build shareholder value.
“For much of the last year, the Company attempted to rationalize maintaining the current portfolio structure by alluding to the fact that eBay gains ‘a few hundred million dollars’ worth of trade’ by having Classifieds in the eBay portfolio,” the letter said. “While that is a compelling soundbite, when we apply the core Marketplace take rate to that value, it becomes inconsequential, especially in comparison to the potential value creation opportunity.
“In fact, an argument could be made that in the current structure, Classifieds is actually owned by a competitive business, hindering both the core Marketplace business and Classifieds,” the letter continued. “In many markets, Marketplace and Classifieds are competing for the same customers and same product listings. If the businesses were separate, both would be better equipped to attempt to acquire customers and grow without this complication.”