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Don’t Weep for Carl Icahn After the eBay / PayPal ‘Loss’

One step at a time


For all of Carl Icahn’s big bluster over getting eBay (EBAY) to set PayPal free, all he’s been left with is three yards and a cloud of dust.

ebay-stock-carl-icahnThing is, I literally lived in the shadow of the stadium that famed Ohio State football coach Woody Hayes once plied his trade in.

So to me … three yards and a cloud of dust ain’t all that bad.

Since late January, Icahn has been agitating for eBay to spin off its successful PayPal payments division, replete with insults and loud interviews, as well as returned shots from the online auction site. But Thursday, the tiff came to an anticlimactic end, as the two parties announced they had come to an agreement.

The result appears sister-kissingly disappointing for Icahn:

  • Ebay won’t spin off PayPal.
  • Ebay won’t even spin off part of PayPal.
  • Ebay won’t be doing anything about CEO John Donahoe, or directors Marc Andreesen and Scott Cook, who Icahn blasted throughout the process.
  • Ebay will appoint an independent director with Carl Icahn’s stamp of approval — David Dorman, current CVS Caremark (CVS) chairman.
  • But it won’t be one of the two directors he was trying to push into eBay (Daniel Ninivaggi and Jonathan Christodoro).

It’s not much, that’s for sure. And it feels like even less, considering the path this story took.

For months, Carl Icahn delivered fiery sermons that would’ve made Jonathan Edwards proud, all in the name of convincing EBAY stock holders not only that eBay should spin off PayPal to unlock shareholder value, but by the end, that eBay’s management was utterly unfit for duty.

Look at the laundry list of comments tossed at Donahoe & Co. in just a few short months:

  • “Completely asleep or, even worse, either naïve or willingly blind to lapses by the board.”
  • “Complete disregard for accountability.”
  • “I don’t think eBay is a well-run company.”
  • “The eBay board and management believe that … blatant conflicts of interest and self-dealing will be tolerated.”
  • “They appear to be value-driven for themselves.”

Not to mention a thorough dressing-down of eBay’s handling of Skype.

So … one board member? A proud “we’re not givin’ up yet, though!” statement? And flat EBAY stock to this point?

It feels kind of empty … but it’s not.

Thing is, Carl Icahn annoys the heck out of me, and his stance from the bully pulpit is obviously not for the benefit of any shareholder but himself.

But it’s hard not to respect his tactics. Because I see a little of “three yards and a cloud of dust” in it.

Woody Hayes called the run-heavy tactic “a crunching, frontal assault of muscle against muscle, bone upon bone, will against will.” Sure, things don’t get that physical on Wall Street, but the spirit is very much there. Icahn throws himself fully into the melee … and is willing to accept merely a few yards here and there in hopes of an eventual bigger victory.

If it sounds familiar, that’s how his battle with Apple (AAPL) went down. Carl Icahn went public with his advances toward Tim Cook about the company’s huge cash hoard, setting a target of $50 billion in buybacks.

Icahn finally gave up after Apple had announced it had bought back roughly $14 billion in shares within a two-week period, which brought the company’s repurchase total to $40 billion over the previous 52 weeks.

Three yards and a cloud of dust.

Gene Marcial, writing for Forbes, had a similar take on the Apple situation:

“At first glance, it would appear that the courageous if unpredictable takeover artist was giving up on his quest to influence management into paying more attention to shareholder value. But analysts and investors who watch Apple like a hawk think otherwise.”

And Carl Icahn didn’t walk away from Apple — he merely stopped shouting. Now, he’s doing the same with eBay.

“I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future,” he said in a statement.

Anyone who thought a PayPal spinoff within a few months was the likeliest of scenarios was dreaming — especially after a shareholder survey showed such mixed emotion on the subject. PayPal is minting money for eBay, so extracting it would’ve taken some serious doing. If nothing, it’ll take time.

Time … and an open ear:

“Icahn has signed a confidentiality agreement covering any non-public information that directors and certain officers of the company may share with him. In addition, the company agreed not to adopt a policy precluding such persons from speaking to Mr. Icahn, and that it would advise them that they may speak to Mr. Icahn if they are willing to do so.”

Another three yards.

And soon enough, Icahn will line up once more.

Kyle Woodley is the Deputy Managing Editor of As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley.

Article printed from InvestorPlace Media,

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