eBay 2001 Annual Report Download - page 49

Download and view the complete annual report

Please find page 49 of the 2001 eBay annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 101

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101

hardware is hosted at the Exodus facilities in Santa Clara, California, the Qwest Communications facilities
in Sunnyvale, California, and/or the Sprint Communications facilities in Sacramento, California, each of
which provide redundant communications lines and emergency power backup. 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 to potential disruption if the operators of these facilities have Ñnancial diÇculties. In
early 2002, Cable and Wireless plc acquired substantially all of Exodus's data center assets under Exodus's
Chapter 11 bankruptcy proceedings. We expect that these data center assets, now owned by Cable and
Wireless plc, will continue to be branded using the Exodus name. 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, a decision to close a facility we are using without adequate notice for
Ñnancial reasons or other unanticipated problems at any of the Exodus, Qwest or Sprint facilities could
result in lengthy interruptions in our services. In addition, the failure by Exodus, Qwest or Sprint 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.
We have experienced system failures from time to time. Our primary 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.
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;
‚ unanticipated economic or political events;
‚ sales of our common stock or other securities in the open market; and
‚ other events or factors, including these described in this ""Risk Factors'' section and others that may
be beyond our control.
In addition, the trading prices of Internet stocks in general, and ours in particular, have experienced
extreme price and volume Öuctuations in recent periods. These Öuctuations often have been unrelated or
disproportionate to the operating performance of these companies. Notwithstanding a sharp decline in the
prices of Internet stocks in general, the valuation of our stock remains extraordinarily high based on
45