Did Carl Icahn Go Too Far in His Letter to eBay (Nasdaq: EBAY) Investors?

On Monday, activist investor Carl Icahn delivered a swift jab at eBay Inc. (Nasdaq: EBAY) leadership in a terse letter questioning the loyalties of certain board members and the competence of Chief Executive Officer (CEO) John Donahoe.

In a letter to eBay shareholders, Icahn charged eBay leadership with the most "blatant disregard" for accountability that his firm Icahn Enterprises "has ever seen."

The bare-knuckled blame includes charges of pseudo-insider trading, gross mismanagement, and failure to address "conflicts of interests" among board members, while calling, yet again, for a spin-off of eBay's surging PayPal division.

eBay responded on Monday to his letter line by line, defending its leadership.

The battle is now heating up, as Icahn pushes for the replacement of specific board members.

We've seen this behavior from Icahn in the past.

As a bullish shareholder, he publicly sparred with hedge fund manager Bill Ackman over the future of Herbalife Ltd. (NYSE: HLF), a battle he has handsomely won as the stock price surged. He called out the board of Apple Inc. (Nasdaq: AAPL) over its glut of cash on hand, pushing for a $50-billion stock buyback. He even had no qualms about taking Dell Inc. (Nasdaq: DELL) private, a move that would have wrestled control of the company away from its founder and CEO Michael Dell, who started the company in 1984 from a college dorm room.

But the new charges against eBay leaders raise a question of whether Icahn has gone too far this time…

The PayPal Battle Heats Up

Here's the crux of Icahn's position on eBay, his outlook, and his principle concerns about the company:

"We have recently accumulated a significant position in eBay's common stock because we believe there is great long-term value in the business. However, after diligently researching this company we have discovered multiple lapses in corporate governance. These include certain material conflicts of interest, which we believe could put the future of our company in peril. We have found ourselves in many troubling situations over the years, but the complete disregard for accountability at eBay is the most blatant we have ever seen."

Icahn makes several serious charges, accusing CEO John Donahoe's of "ineptitude" in addressing Icahn's concerns.

First, Icahn accuses director Scott Cook, a current board member of Intuit Inc. (Nasdaq: INTU), a minor competitor of eBay, of working for the enemy.

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