eBay Inc (EBAY)’s Q4 2014 Earnings Call Transcript

Bob Swan
The second one, Scott, on the buyback, I indicated that we reduced our share count by roughly 5% this year. And if you take that into account in 2015, you’re going to get to roughly $0.07 to $0.08 of EPS accretion as a result of the actions we took in 2014. So our plans for 2015 are obviously to offset dilution and be opportunistic. But given the $0.10, you should conclude that it doesn’t assume a full $3 billion of execution, and our plans are to be opportunistic as we prepare for separation. Your third question, I think, just related to hedges. I mean, in effect, to make it simple, our PayPal international business is a dollar-functional currency, which allows us to put in place economic hedges for projected revenue. We don’t have that luxury for the eBay business. It’s not dollar functional. Therefore, putting in economic hedges would subject us and you to quite a bit of volatility because we would not get the appropriate accounting treatment. Nothing new there in terms of our historical exposures and our hedging practices. But that’s kind of the dynamics and why it is the way is.

Scott Devit
I’ll add that it’s impressive that you’re able to get a full year guide out at this point in the year with all the complications of the spin. So congrats on that.

Unidentified Company Representative
You guys are easy.

Operator
Our next question comes from Heath Teri of Goldman Sacks.

Heath TerI – Goldman Sacks
John, can you give us a sense of how much of the plan for this year, particularly if PayPal has had a chance to be influenced by the new structure and particularly by the new CEO there, how much we’re sort of at least starting to see his vision for what PayPal potentially can do? And then, Bob, if you can, just give us a sense of what the profile of the customer behind the growth in Merchant Services is looking like now. What’s the use case where you’re seeing the most growth in that number?

John Donahoe
Heath, on your first, actually, Devin and Dan are sitting right here. So Dan is right here. And he’s, I think, 75 days into the job. And as you recall, he brings payments expertise and experience. He’s been in technology. He’s been in mobile. He’s got a strong consumer background. And what’s very apparent is he knows the industry players, whether it’s merchants or partners or tech providers, ecosystem players. So in the, I think, the first 75 days, what he’s come away saying, very impressed with PayPal’s unique assets, its global footprint, our risk capabilities. He keeps saying our risk capabilities are phenomenal, our brand and the opportunity to extend and expand that brand across consumers and across merchants is significant. So what he’s bringing is a greater focus.
I would say one of the challenges PayPal has always had is there’s too many opportunities. And there’s greater focus in the 2015 plan, that I’ve seen in the last several years: focused on product, extending Brain tree, extending One Touch, extending Venmo. Secondly, on expanding things like our credit offering, which increase our relevance both to merchants and to consumers; and then marketing. PayPal really did marketing for the first time in 2014 and we had pretty clear positive return on investment. It was one of the contributors to those very high growth rates. Dan brings a lot of consumer marketing experience, and the 2015 plan continues and has even more marketing. So the 2015 plan, which is, in many ways, a continuation of the current with more sharp focus is, he’s got his footprints on it or handprints on it. And then he’s simplifying the organization to accelerate innovation. So you’ll get a chance to hear from him in the second quarter. Both Devin and Dan will be in the second quarter talking more about the standalone strategies and forward-looking visions for each business. But I think Dan’s off to a strong start.