Bloomberg News

EBay’s PayPal Said to Cut as Many as 400 Jobs

October 13, 2012

EBay Inc. (EBAY:US)’s PayPal is cutting as many as 400 jobs, or about 3 percent of the workforce, an effort by President David Marcus to reorganize the payment processor and trim costs, a person with knowledge of the plans said yesterday.

PayPal is eliminating jobs primarily in its product and technology groups, according to the person, who asked not to be named because the plans are private. The cuts, which will affect at least 300 out of 13,000 jobs, are set to happen in the next few weeks, the person said.

Marcus, who took over in April, is leading an overhaul to streamline a business marked by inefficiencies such as excessive meetings and a months-long project-approval process. He started the makeover in June by consolidating nine product groups into one. Workers also will be reorganized -- moved from walled cubicles and offices to open rooms, where management will sit among staff.

“We have told PayPal employees about plans under way to strengthen and simplify how we create and deliver consistently great products and brand experiences to our customers,” PayPal said in an e-mailed statement yesterday. “We have not yet discussed how these plans may impact any existing jobs across our product, technology and marketing teams.”

Corporate Bloat

Acquired by EBay in 2002, PayPal risks becoming “large” and “lethargic” as newer payment processing providers -- which are addressing the company’s weaknesses -- flood the market, said Kerry Rice, an analyst at Needham & Co.

“You want to fight the corporate bloat,” Rice, based in San Francisco, said in an interview. “There are tons of people that are out there innovating and starting new companies. You have to become more nimble.”

PayPal is facing competition from startups such as Stripe Inc., which also provides tools and services for sellers to accept payments online. As alternatives emerge, PayPal will need to work harder to retain merchants that have said the company’s software takes too long to set up and that customer service is lacking.

Brett Radler, chief executive officer of 86Serving.com Inc., a restaurant-management services company that chose Stripe’s payment processing services, said PayPal’s system took as long as 10 hours.

Marcus became PayPal’s president after the company acquired his mobile-payments startup, Zong, last year.

EBay Chief Executive Officer John Donahoe said he chose Marcus because he wanted to add “startup energy” to PayPal.

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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