eBay Tries To Rebound From Outage — Again

Here we go again. On Friday, leading auction site eBay (Nasdaq: EBAY) suffered another embarrassing outage that will be costly in more ways than one. eBay’s site was down for about 14 hours on Friday, beginning at 4:30 a.m. Pacific Time. In June, eBay also suffered a major outage. That 22-hour outage led to an estimated $3 million (US$) to $5 million of lost revenue for eBay, largely because the company refunded listing and transaction fees.

Friday’s outage will also result in lost revenue, with eBay refunding fees and extending auctions. eBay issued a statement after the stock markets closed on Friday, saying the outage was caused by hardware failure.

“Returning the site to its full functionality is our top priority,” said Meg Whitman, president and CEO of eBay. “We will not rest until we fix this problem.”

eBay Had Said Reliability Was Top Concern

eBay’s customers are probably taking Whitman’s comments with a grain of salt. After all, the outage in June prompted the company to say that its top priority was reliability. eBay actually abandoned a redesign to focus on preventing future outages. Whitman even made a similar statement after the June outage.

“We know we must provide continuous service for our community, and that we have let our community down,” Whitman said at the time. “We will not rest until we make sure that this problem will not occur again and that we make things right for our users.”

eBay went as far as to post an open letter from Whitman and company founder Pierre Omidyar that elaborated on the importance of reliability. By that time, however, the June outage had prompted angry eBay users to post messages on bulletin boards all over the Web, with many saying that they were taking their business to competitors like Yahoo! (Nasdaq: YHOO) and Amazon.com (Nasdaq: AMZN). Judging from the message boards on sites like AuctionWatch.com, customers aren’t as annoyed this time around, but there is still a lot of grumbling.

Stock Impact

Shares of eBay were hammered on Friday, falling 9-5/8 to 83-1/4. Investors are concerned because the outage and refunded fees could have a significant impact on third-quarter earnings.

What’s more, eBay’s problems are becoming disturbingly frequent. The company suffered four minor outages between the major outages in June and on Friday, and eBay has spent a lot of money trying to eliminate downtime. eBay had previously said that it has invested millions in a backup system, hardware and manpower to correct its problems.

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