Why eBay could still make a comeback in the second half of 2014 (Part 2 of 7)
The cyberattack on eBay was one of the worst ever
In the previous part of this series, we discussed why eBay’s (EBAY) operating margins declined last quarter. You saw that the cyberattack on eBay’s database in May caused the company to force users to change their passwords. This resulted in lower user activity. eBay had to increase targeted marketing efforts, which resulted in increasing operating expenses for the company.
According to eBay, this cyberattack compromised about 145 million user records. This is one of the worst database compromises in history.
According to a report from Statista and as the chart below shows, the cyberattack on Adobe (ADBE) last year was the worst attack ever. It affected 152 million records, so it’s ahead of eBay’s cyberattack. The famous cyberattack on Heartland Payment Systems (HPY) in 2009 affected 130 million records. Heartland Payment Systems is a company that process transactions for credit card companies like Visa (V) and Mastercard (MA).
eBay assures customers that no financial information was compromised during the attack
During the conference call to announce earnings, eBay’s management said that the compromised database contained only non-financial information of eBay users. They further said that the information on encrypted passwords wasn’t breached in any way.
However, forcing users to reset their passwords will cause a short-term impact on eBay’s business. eBay expects to recover by the fourth quarter of this year.
Browse this series on Market Realist:
- Part 1 - Why did eBay’s operating margins decline in 2nd quarter 2014?
- Part 3 - Why eBay’s recovery from its data breach will be slower in Europe
- Part 4 - Must-know: Why does eBay’s take rate keep declining?
- Information Technology