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By Jason Stipp and Jeremy Glaser | 10-02-2014 04:00 PM

Friday Five: PayPal Unleashed, Buffett Dives Into Dealership

Our take on eBay's planned spin-off of PayPal, Berkshire's interest in auto dealerships, and more.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five, Morningstar's take on five stories from the market this week.

Joining me with The Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: You're welcome, Jason.

Stipp: Up first this week, eBay reversed course and decided that it was going to spin off PayPal. So what's the rationale behind that, and what's the impact?

Glaser: They did shift gears. Earlier eBay said that PayPal and their core marketplace business really belonged together because there are synergies with … the [eBay] marketplace.

And this week they did say they are in fact going to spin PayPal out sometime next year. They said that PayPal really needs the space, it needs the flexibility, in order to innovate and to come up with new products in a payments marketplace that's changing very rapidly.

I think one sign of this change is Apple Pay, which hasn't even launched yet, but it does seem to be getting a lot of the other payment providers thinking that this might be the tipping point where people really are going to start using mobile to pay, and people are going to move away from plastic cards. I think PayPal wants to position itself well there, and there is a big position to be gained.

Even if Apple Pay is really successful, there is still a limited number of people that have Apple phones. Android is a much bigger platform globally, and there is going to be room for other providers to be in there and potentially make a lot of money, and PayPal wants to be well-positioned for that.

R.J. Hottovy, who is our eBay analyst, thinks that this spin-off is a good idea at this time, and that the agreement they're going to sign for some shared services will help preserve some of the synergies, while providing more flexibility for PayPal, and eBay is trading in 4-star territory right now.

Stipp: Coca-Cola this week made some changes to a compensation plan that had earlier received some criticism. So what's the latest here?

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