Hackers Shut Down eBay, Buy.com Sites

Updated from 3:50 p.m. EST

The Web sites of Buy.com (BUYX) and eBay (EBAY) were shut down by computer hackers Tuesday, one day after Yahoo! (YHOO) came under a similar attack.

The hackers' action against Buy.com may have been timed to coincide with its stock-market debut on Tuesday, in which Buy.com's shares closed at nearly double the price of their initial public offering. The online retailer said its site was disrupted for more than three-and-a-half hours during the afternoon.

The hackers shut down eBay's Internet auction site around 6 p.m. EST, and it did not appear to be working around 8 p.m. EST.

Greg Hawkins, Buy.com's chief executive, said in an interview that the failure of Buy.com's Web site was "due to a coordinated denial-of-service attack," alluding to the same process that the Yahoo! hackers had used.

"We engineered this site, believe me, to handle capacity, so this was an unprecedented attack and it obviously slowed down the site," Hawkins said. He reiterated that the disruption of the site was not caused by the increase in user traffic that followed the company's IPO.

The Buy.com site went down around 1:50 p.m. EST and resumed service around 5:30 p.m. EST, the company said. It was unclear whether the problems with the site were restricted to only parts of the U.S. CNBC said the problems were limited to computer users in and near New York, Boston and Chicago.

An eBay spokeswoman, Jennifer Chu, confirmed that hackers had shut down the company's site. Another spokeswoman, Kristin Seuell, said the company did not immediately know what geographical areas were affected by the outage.

It was not known whether the same hackers were responsible for the attacks on all three sites.

The latest problems surprised a computer-security expert. "I didn't expect to see a repeat performance," said Elias Levy, the chief technology officer of SecurityFocus.com. "But as long as they can find enough machines to break into to launch the attack, they can keep doing this," he added, referring to computer hackers.

The Web sites of the cable channel CNN also appeared to have been disrupted for at least an hour Tuesday night, but it was unclear whether computer hackers had shut them down.

On Monday, Yahoo!, which operates one of the most popular and best-performing sites on the Web, said it was the victim of a "planned attack" that killed service for almost three hours.

The Yahoo! hackers had taken over computers, installed their own remote-controlled software and flooded the site's server with requests, Levy explained. "Right now, there is no defense for this," he said.

Levy said that these attacks don't endanger credit card information, just close the doors for shoppers.

The disruption of Buy.com's site cast a pall over what might have been a day of celebration for the company's executives. Earlier, shares of Buy.com more than doubled in their first hours of trading after the company's initial public offering. The stock later retreated a bit but closed up 12 1/8, or 93%, at 25 1/8. Shares of eBay finished up 3/16 at 169 3/4.

Buy.com, based in Aliso Viejo, Calif., is involved in the cutthroat business of online retailing dominated by Amazon.com (AMZN). Buy.com sells through its virtual warehouse computer hardware and peripherals, software, books, videos, DVDs, computer games and music.

Shepherded by lead underwriter Merrill Lynch, the company raised $182 million through the initial public offering of 14 million shares at $13 apiece. The market reaction appeared strong, as this sector, with its rock-bottom prices, low margins and stiff competition, has become less attractive to investors, who are being lured by steep growth projections for business-to-business companies and their stocks.

While Buy.com raised its IPO price slightly above the original range of $10 to $12, institutional demand for the stock wasn't as strong as for new business-to-business issues like Avanex (AVNX) and FirePond (FIRE) last week.

Scott Blum, the company's founder, owns about 56% of Buy.com; the Japanese venture capital firm Softbank owns 34%. Blum left Buy.com in 1999, just before it filed to go public.

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