eBay To Acquire Payment Processor Braintree For $800 Million

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An illustration of online payment service PayPal at LeWeb Paris 2012 in Saint-Denis, near Paris last year.

AFP/Getty Images

eBay, which owns PayPal, is buying online and mobile payment company Braintree for $800 million – an acquisition that the auction site's CEO calls "a perfect fit."

The deal, announced Thursday, could help eBay as it tries to convince customers to ditch their credit and debit cards and use PayPal instead.

"Braintree is a perfect fit with PayPal," eBay Inc. President and CEO John Donahoe said in a statement.

Braintree CEO Bill Ready and his team "add complementary talent and technology that we believe will help accelerate PayPal's global leadership in mobile payments," Donahoe said.

USA Today quotes Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, as saying that the deal:

"[Gives] eBay access to current and prospective clients of Braintree. The start-up has focused on integrating its payment platform with fast-growing start-ups and the mobile apps that power much of their business, Sakhrani explained."

"Second, Briantree's Venmo [mobile payments] business has gained a lot of traction with younger users, a demographic that PayPal may have been struggling to reach, according to the KBW analyst."

"Third, Braintree has superior application programming interfaces, or APIs, which control how different software interacts with each other. This is important for attracting software developers to a platform. While PayPal has been trying to improve its APIs, it probably made sense to buy Braintree and quickly adopt its APIs, Sakhrani said."

The Mystery Of $600 Million Traded In The Blink Of An Eye

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A television monitor on the floor of the New York Stock Exchange shows the decision the Federal Reserve made on Sept. 18, 2013.

Richard Drew/AP

Here's a mystery involving physics, technology and the markets that meant the difference between nothing and millions of dollars.

Last Wednesday, the Federal Reserve announced it would not be tapering its bond buying program at 2 p.m. ET. The news takes seven milliseconds — about the speed of light — to reach Chicago. But before the seven milliseconds was up, a few huge orders based on the Fed's decision were placed on Chicago exchanges. CNBC broke the story:

"According to trading data reviewed by CNBC, they began buying in Chicago-traded assets just before others in that city could possibly have been aware of the Fed's decision. By one estimate, as much as $600 million in assets changed hands in the milliseconds before most other traders in Chicago could learn of the Fed's September surprise — a sharp contrast to the very low volume of trading ahead of the Fed's decision."

How did this happen? Right now, we don't know. But in high-speed trading, where computer algorithms fed by data make trades based on pre-programmed strategies, the difference between trading at seven milliseconds after the news and two milliseconds after the news can be worth millions.

The Federal Reserve is concerned, and it's in the process of questioning news organizations, since reporters get the Fed release early. But, they get the information in a secure room and aren't allowed to communicate with the outside world until 2 p.m. on the dot. When CNBC asked whether any organizations possibly broke the Fed's rules, the Fed spokesman didn't respond on the record.

The whole episode raises the question of how we're using our money and talent, writes Washington Post columnist Neil Irwin:

"There is a role in [capital] markets for traders whose work is more speculative ... But when taken to its logical extremes, such as computers exploiting five millisecond advantages in the transfer of market-moving information, it's much less clear that society gains anything ... In the high-frequency trading business, billions of dollars are spent on high-speed lines, programming talent, and advanced computers by funds looking to capitalize on the smallest and most fleeting of mispricings. Those are computing resources and insanely intelligent people who could instead be put to work making the Internet run faster for everyone, or figuring out how to distribute electricity more efficiently, or really anything other than trying to figure out how to trade gold futures on the latest Fed announcement faster than the speed of light."

Apple Sells 9 Million New iPhones In Opening Weekend

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Apple says it has sold 9 million iPhone 5s and 5c models since their launch on Friday. Here, staff members at an Apple retail store in Beijing cheer a customer after he bought a new iPhone.

Andy Wong/AP

Sales of its new iPhone 5s and 5c models have surpassed other iPhone releases and exceeded initial supply, Apple says. The company says it has sold 9 million of the phones since their launch on Friday and that "many online orders" will ship in coming weeks.

"This is our best iPhone launch yet — more than nine million new iPhones sold — a new record for first weekend sales," Apple CEO Tim Cook said in a Monday press release. He added that "while we've sold out of our initial supply of iPhone 5s, stores continue to receive new iPhone shipments regularly."

As Apple notes, the phones went on sale Friday in the United States as well as in many parts of Europe and Asia, including China. That was a departure from previous releases, in which American consumers were able to buy their smartphones weeks or even months ahead of the international market.

The news led Apple to brighten its own predictions for sales in the current financial quarter, which ends this month.

As Reuters reports:

"Apple tweaked its financial forecast to reflect the higher sales, an unusual move for the company. It said revenue in the fiscal fourth quarter would be near the high end of its previous forecast of $34 billion to $37 billion."

Analysis of recent U.S. cellphone activation data reveals that sales of the more expensive iPhone 5s are outpacing those of the 5c, which was introduced as a more affordable option. That's according to CNET, which cites the research firm Localytics.