eBay's system crashes, causing shares to drop

Online auctioneer has had many outages


August 07, 1999|By BLOOMBERG NEWS

SAN JOSE, Calif. -- eBay Inc., the No. 1 online auctioneer, had another system failure yesterday, causing its share price to fall 10 percent.

The company said the crash of its auction site was caused by "a minor glitch" in data processing, and engineers were trying to pinpoint the problem. The system was running about 6: 30 a.m. Eastern time after being offline for several hours for weekly maintenance. Then it crashed about 7: 30 a.m. Eight hours later the site was not fully restored.

The crash followed several failures in recent months, including four outages last month and a 21-hour outage June 10. The company said the June 10 outage could cut $5 million from its second-quarter revenue.

eBay's problems could create inroads for competitors. While eBay is not the only auction site to have outages, its shutdowns may prompt customers to test rival auction sites run by Yahoo! Inc. and Amazon.com Inc., some investors have said.

eBay's outages provide "free publicity to these other sites, who capitalize on their problems," said Sue Rothberg, senior analyst at Gomez Advisors Inc. in Concord, Mass. "I think people are losing patience. It's getting to be a broken record."

eBay shares fell $9.625 to close at $83.25, after dipping to $82.50.

This week, Vice President Steve Westly said eBay was working on a new backup computer system that would limit outages to less than 20 minutes. He said the backup would be in place by year's end.

"It's not clear what the problem is. That's going to create a tremendous amount of customer dissatisfaction," said Richard Whitehead, vice president of strategic technologies at Micromuse Inc., a management software company in San Francisco. With an outage of this nature, he said, "the only way to retain customers is compensation" for the lost auction opportunities.

Pub Date: 8/07/99

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