After a lost decade, the newly independent company is making big investments again.
During the gloomy spring of 2009, few tech companies were under a darker cloud than online auction giant eBay EBAY -1.11% . Its online marketplace, one of the breakout Internet businesses of the 1990s, had seen its revenue stall. Competitors like Amazon AMZN -0.37% had cut into its market share, consumers had slashed their spending, and the company’s stock was down more than 80% from its 2007 peak.
It made for an ugly plateful of problems for John Donahoe, the former Bain chief who had succeeded Meg Whitman as CEO in 2008. But he and his board had a plan for a turnaround. Two subsidiaries owned by eBay had great potential but were never a great fit with its core business: Internet calling service Skype and online-payment pioneer PayPal PYPL -0.60% . Spinning them off would raise some welcome cash while freeing eBay to focus on its auctions and retail sales. Early in 2009, the board voted to divest itself of both units. “It was almost a done deal,” Donahoe recently told Fortune.
The key word here is almost .
On April 14, the company announced its plan to let Skype go. But even as the news went out, Donahoe was having second thoughts about PayPal. Apple AAPL 0.20% had just disclosed that its App Store had crossed the 1-billion-download mark. And thanks to the soaring popularity of the iPhone, tech executives were urgently pondering the potential of the smartphone as a tool for commerce. PayPal, meanwhile, was the world’s only major digital-payment brand; it already had 70 million users, and payment volume was growing 20% annually.
The more Donahoe pondered, the more foolish a spin-off seemed. “Mobile was exploding,” he recalls, and “there were obvious synergies between […]
