EBay shares drop 18 per cent after outage

The long outages hitting Internet auction site eBay since last Friday have cost the company millions of dollars in lost fees and falling stock prices.

Whatever the cause, eBay shareholders have reacted strongly to the ongoing outages; eBay shares dropped 18.1 per cent yesterday. Shares opened Monday morning at $US159.5 and ended the day at $136, with $133.5 as the day's low. The latest stock dive follows Friday's 9 per cent fall.

According to eBay, the problem stems from Sun Microsystems' software, but eBay so far has no intention of suing Sun for damages, said Kevin Purseglove, spokesman for eBay, based in San Jose, California.

The problems resulted in a corrupted database, which halted the auctions several times -- at its worst, for almost 22 consecutive hours.

"The operation is still much slower than normal," Purseglove said.

The company intends to hire more senior staff members with extensive IT experience, he said. The company will also refund auction fees for $US3 million to $5 million, according to a written statement.

EBay hopes to re-establish trust with shareholders and users of the site by stabilising the operation, Purseglove said. The company expects to be able to pinpoint the exact problem during the next couple of days.

The outages also have resulted in a new policy. Refunds will be given for all fees for any auction ending during an outage of more than two hours. Furthermore the company will automatically extend by 24 hours all auctions scheduled to end during the outage.

According to eBay, the typical number of items available for auction at any one time is 2.2 million. Late in the afternoon the number was down to 1.8 million.

EBay shares have dropped about 42 per cent since April 27, when stocks were at their highest in the last year.

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