PayPal cutting jobs as part of major reorganization
By Alistair Barr
SAN FRANCISCO (Reuters) - PayPal is cutting about 325 jobs as part of a major reorganization by its new president, David Marcus, designed to regain an innovative edge and head off rising competition.
PayPal, the online payment pioneer owned by eBay Inc, said on Monday the full-time jobs would be eliminated as it combines nine product-development groups into one. The company is also cutting about 120 contractors.
EBay will take a $15 million pretax restructuring charge in the fourth quarter related to the job reductions.
PayPal, which started in the late 1990s as a scrappy Silicon Valley start-up, had almost 13,000 employees earlier this year.
"In a large company, at some point you reach the law of diminishing returns when more people means slower," said Marcus, who used to run mobile payments start-up Zong, which PayPal acquired last year.
"You have a lot of duplication of roles with nine product groups merging into one," he said.
Wall Street considers PayPal the crown jewel of eBay because it is growing fast and profit margins are expanding. But in Silicon Valley, PayPal is considered a slow, bureaucratic behemoth - a reputation that has made it difficult for the company to attract and retain smart software engineers and designers.
PayPal needs such talent more than ever because a slew of payments start-ups, including Square, Stripe and Dwolla, are developing rival services and products that are beginning to catch on with merchants and consumers. Continued...