The rumors were sadly true. PayPal president David Marcus, posting on the company's blog, reported that 325 fulltime employees and approximately 120 contractors were laid off today. Those affected were mostly in the company's product and technology groups.

Marcus said the cuts were caused by PayPal's recent efforts to redesign its product organization. The changes come as PayPal's strategy begins to focus on offline merchants and mobile payments.

"We are creating agile teams of designers, engineers and product managers," Marcus said in his post. "Instead of being organized around projects, our teams will now be dedicated to products and focused on our customers — consumers, developers, small businesses and large retailers."

Marcus took time to publicly acknowledge the layoffs and praise the PayPal employees who were let go, a refreshing change from the way many tech companies handle bad news.

"These are good people, good friends and colleagues, who have played a role in creating PayPal’s strong global leadership position today," Marcus said. "We appreciate all the contributions that they have made. And they are being treated with fairness and dignity, consistent with our culture and values."

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