eBay Inc. (NASDAQ: EBAY) has reported earnings for its fourth quarter, but perhaps even larger news is that Carl Icahn is taking a small stake on the company and is going to pursue activist investing in the company. eBay is an internet value stock, as it trades at a mere 17-times expected 2014 earnings per share.

eBay is also announcing a $5 billion stock buyback and disclosed the proposals received by Mr. Icahn. Earnings came in $0.81 per share from operations and revenue was $4.5 billion. Thomson Reuters had estimates of $0.80 EPS (vs. $0.70 year ago) and 13.6% revenue growth to $4.54 billion.

eBay further said that its Total company Enabled Commerce Volume rose 22% in the fourth quarter to $61 billion in commerce volume for merchant partners and brands. Both Marketplaces and PayPal achieved record mobile results in 2013, each exceeding $20 billion in mobile volume. eBay’s operating margin increased to 29.2% for the fourth quarter versus 28.5% for the same period last year.

The company generated $1.7 billion of operating cash flow and $1.4 billion of free cash flow during the fourth quarter. It ended the year with a cash and equivalent war chest of $12.8 billion. eBay spent $254 million buying back stock in the fourth quarter.

Guidance for the first quarter was $0.65 to $0.67 per share on revenues of $4.15 to $4.25 billion. Estimates are $0.72 EPS (vs. $0.63 year ago) and revenue growth of 14.8% to $4.3 billion.

2014 guidance is for earnings of $2.95 to $3.00 per share on net revenues  of $18.0 to $18.5 billion; estimates are $3.12 EPS (vs. $2.70 prior) and 15% revenue growth to $18.5 billion.

eBay shares rose 0.5% to $54.41 ahead of the report. the 52-week trading range is $48.06 to $58.04. The after-hours response has been very strong, perhaps even marking a new 52-week high, rising 7.7% to $58.60.

Below is a copy/paste of the Carl Icahn proposal notes:

The company also announced today that it has received a notice from Carl Icahn indicating that he has nominated two of his employees to its Board of Directors and submitted a non-binding proposal for a spinoff of its PayPal business into a separate company. The notice stated that companies controlled by Mr. Icahn had, earlier this month, acquired shares and derivative securities that give him an economic interest of approximately 0.82% in the company.

eBay welcomes the opportunity to listen to the perspective of all of its shareholders, including Mr. Icahn. His Board nominations will be passed on to the Board’s Corporate Governance and Nominating Committee, which will consider them in the ordinary course of business. We would note that eBay has a world-class board of directors with directors who have significant experience in technology and financial services.

Regarding Mr. Icahn’s separation proposal, eBay’s Board of Directors routinely assesses the company’s strategic direction and has explored in depth a spinoff or separation of PayPal. eBay’s Board of Directors has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value. As part of eBay Inc., PayPal is able to leverage the company’s technology capabilities, commerce platforms and relationships with retailers, brands and large merchants worldwide. Payment is part of commerce, and as part of eBay, PayPal drives commerce innovation in payments at global scale, creating value for consumers, merchants and shareholders.

eBay Inc.’s Board of Directors and management remain focused on delivering sustainable results and driving long-term value for all shareholders.

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