eBay 1998 Annual Report Download - page 35

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occur. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems at
the Exodus facility could result in interruptions in our services. In addition, the failure by Exodus 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. Such interruptions will reduce our revenues and profits, and our
future revenues and profits will be harmed if our users believe that our system is unreliable.
In the quarter ended December 31, 1998, we experienced longer and more frequent system interruptions than in
the first three quarters of 1998. Our website has been interrupted for periods ranging from five minutes to three
hours. In addition to placing increased burdens on our engineering staff, these outages create a flood of user
questions and complaints that must be responded to by our customer support personnel. If we experience frequent or
persistent system failures, our reputation and brand could be permanently harmed.
Unauthorized break-ins to our service could harm our business.
Our servers are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which
could lead to interruptions, delays, loss of data or the inability to complete customer auctions. In addition,
unauthorized persons may improperly access our data. We recently experienced an unauthorized break-in by a
“hacker” who has stated that he can in the future damage or change our system or take confidential information. Any
such actions by this or any other individual could harm us. Such actions may be very expensive to remedy and could
damage our reputation and discourage new and existing users from using our service.
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 fluctuations in response to a variety of factors, including the following:
• actual or anticipated variations in our quarterly operating results;
• announcements of technological innovations or new services by us or our competitors;
• changes in financial estimates by securities analysts;
• conditions or trends in the Internet and online commerce industries;
• the emergence of online securities trading;
• changes in the market valuations of other Internet or online service companies;
• developments in Internet regulations;
• announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures
or capital commitments;
• unscheduled system downtime;
• additions or departures of key personnel;
• sales of our common stock or other securities in the open market; and
• other events or factors that may be beyond our control.
In addition, the trading price of Internet stocks in general, and ours in particular, have experienced extreme
price and volume fluctuations in recent months. These fluctuations often have been unrelated or disproportionate to
the operating performance of these companies. The valuations of many Internet stocks, including ours, are
extraordinarily high based on conventional valuation standards such as price to earnings and price to sales ratios.
The trading price of our common stock has increased enormously from the initial public offering price. These
trading prices and valuations may not be sustained. Any negative change in the public’ s perception of the prospects
of Internet or e-commerce companies could depress our stock price regardless of our results. Other broad market and