eBay 2000 Annual Report Download - page 44

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System failures could harm our business
We have experienced system failures from time to time. Our website has been interrupted for periods of
up to 22 hours. In addition to placing increased burdens on our engineering staÅ, these outages create a Öood
of user questions and complaints that need to be addressed by our customer support personnel. Any
unscheduled interruption in our service results in an immediate loss of revenues that can be substantial and
may cause some users to switch to our competitors. If we experience frequent or persistent system failures, our
reputation and brand could be permanently harmed. We have been taking steps to increase the reliability and
redundancy of our system. These steps are expensive, reduce our margins and may not be successful in
reducing the frequency or duration of unscheduled downtime.
Substantially all of our computer hardware for operating our services (other than Half.com) currently is
located at the facilities of Exodus Communications, Inc. in Santa Clara, California and AboveNet
Communications in San Jose, California. The computer hardware for the Half.com service is located in the
facilities of Level 3 Communications in Philadelphia, Pennsylvania. These systems and operations are
vulnerable to damage or interruption from earthquakes, Öoods, Ñres, power loss, telecommunication failures
and similar events. They are also subject to break-ins, sabotage, intentional acts of vandalism and similar
misconduct. We do not maintain fully redundant systems or alternative providers of hosting services, and we
do not carry business interruption insurance suÇcient to compensate us for losses that may occur. Despite any
precautions we may take, the occurrence of a natural disaster or other unanticipated problems at any of the
Exodus, AboveNet or Level 3 facilities could result in interruptions in our services. In addition, the failure by
Exodus, AboveNet or Level 3 to provide our required data communications capacity could result in
interruptions in our service. Any damage to or failure of our systems could result in interruptions in our
service. Interruptions in our service will reduce our revenues and proÑts, and our future revenues and proÑts
will be harmed if our users believe that our system is unreliable.
Risks Relating to Possible California Power Outages
The State of California is currently experiencing a chronic shortage of power and, as a result, power
outages may occur. Although we have emergency backup power capabilities at the facilities of Exodus,
AboveNet, Level 3 Communications and limited backup power at our headquarters, repeated or lengthy
power outages may adversely aÅect our business.
Our stock price has been and may continue to be extremely volatile
The trading price of our common stock has been and is likely to be extremely volatile. Our stock price
could be subject to wide Öuctuations in response to a variety of factors, including the following:
‚ actual or anticipated variations in our quarterly operating results;
‚ unscheduled system downtime;
‚ additions or departures of key personnel;
‚ announcements of technological innovations or new services by us or our competitors;
‚ changes in Ñnancial estimates by securities analysts;
‚ conditions or trends in the Internet and online commerce industries;
‚ changes in the market valuations of other Internet companies;
‚ developments in Internet regulation;
‚ announcements by us or our competitors of signiÑcant acquisitions, strategic partnerships, joint
ventures or capital commitments;
‚ sales of our common stock or other securities in the open market; and
‚ other events or factors that may be beyond our control.
39