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Ebay Vs. Icahn: How Soon Before Mobile Payments Actually Take Off?

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The legendary corporate noodge wants results faster from eBay's PayPal unit, which he says should stand on its own as online mobile payment systems go mainstream.

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Carl Icahn, whose latest public squabble is with the management of eBay (NASDAQ:EBAY), dislikes being called a "corporate raider." He prefers the term "activist investor."

Or, how about "noodge," a noun defined as "one who pesters and annoys with persistent complaining"?

Maybe "legendary corporate noodge Carl Icahn" will do, since he's been doing this since the roaring 1980s, making his name with a hostile takeover of the now-defunct Trans World Airlines.

He's been at it ever since and with considerable success, too. Icahn reportedly is a billionaire many times over.

The latest of Icahn's many missions is to noodge eBay. He recently revealed that he owns about 2.25% of the giant online retail site, and he is attempting to force the company to spin off its PayPal online payments services unit as a separate company.

Icahn says shareholders will benefit from a move to separate PayPal from its parent company.

In the process of making his argument, Icahn, who has never been called "mealy mouthed," has described the company's management as "dysfunctional" and accused two members of its board of directors of having conflicts of interest.

PayPal is already a cash cow for eBay, contributing about 41% of the company's revenues last year. While it grew up as the preferred electronic-payments method for eBay transactions, it has branched out into "global commerce" in general, and mobile payments in particular.

That puts PayPal out there as a leading contender in the high-stakes "mobile wallet" game, which has attracted major corporations from Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) to Visa (NYSE:V) and MasterCard (NYSE:MA).

The immediate problem is, American consumers haven't yet shown as much enthusiasm for mobile-wallet services as corporations have.

Only about 6% of smartphone users said they had used their smartphones for a point-of-sale purchase in the past year, according to a Federal Reserve consumer survey released in March 2013.

About 24% of smartphone users had made a mobile payment or money transfer of some type -- not necessarily a point-of-sale purchase -- in the year ending November 2012. That was an increase of only 1% from the previous year's survey results.

That doesn't suggest that the mobile wallet is a failed idea. But it might not be catching on fast enough for Carl Icahn, who is, after all, 78 years old.

He's not slowing down, either. He has waged ugly public battles with the managements of Herbalife (NYSE:HLF), Dell Inc (NASDAQ:DELL), Chesapeake Energy (NYSE:CHK), and Apple, and that's just in the past year.

Three years ago, a profile in the New York Times cited 91 activist campaigns involving 79 American companies launched by Icahn just since 2004.

It seems to be a pretty good strategy. His investment fund, Icahn Capital Management, returned a profit of 31% in 2013.

In his latest letter to shareholders, Icahn said he would soon be outlining in detail his reasons for believing that PayPal would be better off as a stand-alone company.

Meanwhile, Icahn is filling in the time firing off a series of letters critical of the company's operations to eBay shareholders.

Most effective of these is an accusation that venture capitalist Marc Andreessen serves as a member of the board of directors in direct conflict with his role as principal of Andreessen Horowitz. He cited one particular transaction: eBay's sale of its Skype unit to a group of investors including Andreessen Horowitz for about $1.9 billion. About 18 months later, the consortium sold Skype to Microsoft (NASDAQ:MSFT) for $8.5 billion.

Andreessen and eBay's management have vigorously defended his actions, replying that Andreessen recused himself from all board discussions of the transaction.

In fact, Icahn's campaign may already have yielded results. EBay stock has soared 7.5% since Icahn began his campaign. Forbes.com points out that the increase in the value of his holdings makes Icahn about $108 million richer.

He says he will release the details of his arguments in favor of spinning off PayPal soon, and will make the proposal at the next eBay shareholder meeting on April 14.

See also:

Prepare to Wait a Little Longer for the iPhone 6?

Internet of Everything Will Be Worth $19 Trillion, Reminds Cisco CEO

TiVo Inventors Follow in Chromecast's Footsteps With Qplay, but Disappoint
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