Where's the Leadership at eBay and E*Trade?

Last week the leadership of both eBay Inc. and E*Trade Group Inc. did little to inspire stockholders -- or help the price of their shares from falling.

ebay, the No. 1 online auctioneer, had yet another system crash which lasted more than nine hours -- pushing shares of its stock down 10 percent. At almost the same time news came that two top E*Trade executives sold off 350,000 shares of their stock as the price of their company's stock plummeted 20 percent.

Actions Speak So Loudly

In E*Trade's case, some wonder what message Christos Cotsakos, its chief executive, was telegraphing Wall Street when he decided to sell off 200,000 shares of his stock in two blocks on July 30 and last week. But when Kathy Levinson, E*Trade's chief operating officer, also sold 150,000 shares last week -- it raised analysts' eyebrows. Isn't this the same company that was boasting a few months ago that it would soon become the No. 1 online broker? What could these top execs have been thinking?

Is it any coincidence that this comes at a time when daily average trades only rose 15 percent in the quarter ended June 30 compared to a 63 percent increase in the previous three months? While both execs had every right to sell off some of their holdings -- it still makes the sailors nervous when the Captain and his first mate head for the lifeboat.

eBay's Blues

If eBay's new outage last week wasn't so tragic and cost its stockholders so much money, it would be good sitcom material. Once again, eBay's powers that be blamed the latest crash on "network anomalies" -- after being off line for several hours for weekly maintenance.

This outage comes on the heels of a number of such failures in recent months, including four outages in July and a 21-hour outage on June 10. eBay announced that one will slice a cool $5 million (US$) from its second-quarter revenue.

Excuses Don't Cut It

Earlier this week, eBay officials said they were working on new backup computer systems that would limit future outages to less than 20 minutes. These systems, however, won't be in place until year's end. If I were a stockholder or customer of eBay, this would not give me a warm and fuzzy feeling. To me, 20 minutes outages are not some kind of goal eBay should be shooting for. Any kind of outage is unacceptable. Isn't it?

In addition to eBay's stock falling, the outage has undoubtedly driven more of its customers to other online auction sites -- not to mention the money eBay will have to fork over compensating disgruntled customers to make up for last week's outage.

Followers Not Leaders

The actions of both companies last week show that in the e-commerce arena these days there is no shortage of followers -- but leaders seemed to have become an endangered species.

What do you think? Let's talk about it.