Market Overview

Icahn Issues Another Open Letter to eBay Holders

Related EBAY
Benzinga's Top Upgrades, Downgrades For January 12, 2018
Cowen Turns Bullish On PayPal, Says 'Better Later Than Never'
Will 'Shop Your Way' Reward Sears With Profits? (GuruFocus)

Today Carl C. Icahn released the following open letter to stockholders of eBay Inc.

We have read the responses of eBay's public relations machine. We find it interesting that Mr. Donahoe, Mr. Andreessen and Mr. Cook have decided to hide behind them, rather than state the facts themselves.

FACT ONE eBay has challenged us to focus on honest, accurate debate. We do not believe eBay is serious about this. However, yesterday CNBC offered a public forum for that debate. We immediately told CNBC we would be happy to do it, but we doubt eBay will accept its own challenge. We will soon find out. At this moment, not surprising to us, eBay has not responded. We eagerly await their reply.

FACT TWO eBay was planning to IPO Skype. Mr. Andreessen and his investor group preempted the IPO, purchasing 70% of Skype for less than what eBay paid for it. Had eBay sold Skype to Microsoft at the price paid to Mr. Andreessen's group, eBay shareholders would have been at least $4 billion richer upon the sale. Mr. Andreessen's group profited by about $4 billion in only a year and a half. This is an indisputable fact.

FACT THREE eBay states it explored all available options for Skype before selling to Andreessen's group. Since we are highly skeptical of this, yesterday we sent a letter to eBay demanding to inspect all books and records regarding the process surrounding this transaction – pursuant to our legal right under Delaware law. Will Mr. Donahoe provide those records immediately or waste time to fight our request and hide behind his legal army?

FACT FOUR eBay states the conflicts regarding Mr. Andreessen's investments are acceptable. Mr. Andreessen has funded, sits on boards of, and advises no less than five competitors, four of which directly compete with PayPal – all the while potentially having access to nonpublic information regarding PayPal's operating performance. Based on our research, Mr. Andreessen's actions are by far an outlier on public markets - even for technology company boards. We do not consider them even close to satisfying the "world-class" ^ standards that eBay claims to have established for its board.

FACT FIVE It is interesting that eBay did not even mention Mr. Cook's alleged transgressions in its reply yesterday. But eBay has previously stated that Mr. Cook's company, Intuit (of which he is the founder, a board member, the chairman of the executive committee and an employee), and PayPal are not competitors. However, to state they are not competitors is absurd. Both PayPal and Intuit have publicly declared the increasing importance and the desire to greatly expand within payment processing over the long-term. Both companies have identical product offerings such as "PayPal Here" and "GoPayment", among many others. In our opinion, having Mr. Cook on the board while planning PayPal's future is akin to having Pete Carroll, coach of the Seattle Seahawks, sitting in when the Denver Broncos were constructing their game plan for the Super Bowl (then again, maybe he did).

FACT SIX Amazingly, eBay states the hiring embargo Mr. Cook allegedly demanded of the company is "old" news. However, the Department of Justice complaint concerning Mr. Cook's actions is still currently pending and the company has not announced that it has taken any action regarding Mr. Cook's alleged attempts to intervene in its hiring practices.

We look forward to an honest, accurate debate on the issues we have raised.


Carl C. Icahn

Posted-In: News Hedge Funds General


Related Articles (EBAY)

View Comments and Join the Discussion!