eBay: Time To Spin PayPal?

By Eric Savitz

Should eBay (EBAY) spin off PayPal?

Breaking Views raises that issue in a piece published in the New York Times today.

The piece notes that eBay expects PayPal to generate up to $1 billion in operating profit next year; give that the same multiple as Visa (V), and the business would be worth over $12 billion, or close to half eBays enterprise value. The story asserts that the company could grow more quickly if it were not tied to eBay, which is a competitor for many retailers that could potentially use the service to process payments.

The story says that a sum-of-the-parts calculation finds the core eBay business is worth $23 billion, with another $2 billion or so for its minority stake in Skype. That gives you a total valuation of $37 billion, or a premium of more than 20% to the current enterprise value. Ergo, the piece concludes, its time for PayPal to leave the nest.

This morning EBAY is down 6 cents, at $26.92.