Via the angrymoose:

Business

Yahoo!

Boo hoo!

Oct 16th 2008 | TOKYO

From The Economist print edition

More bad news for the struggling internet giant, this time from Japan

The brightest treasure in Yahoo!’s empire has long been its Japanese arm, in which it has a 34% stake. It dominates its lucrative local market and reported increased revenue and profit on September 30th for the year to March. But even this jewel is losing its sparkle.

In September Yahoo! Japan admitted that its online-auction site had suffered a huge security breach. Over the summer it had been flooded with fraudulent login attempts using around 1.5m usernames. Having logged in, criminals used hijacked accounts to sell counterfeit luxury goods.

…

Last month the company acknowledged the problem and agreed to reimburse users who had been charged fees relating to fraudulent transactions. This set off a stampede of further complaints, as other users scrutinised their bills. Yahoo! Japan says it does not know how so many usernames were stolen, but suggests that they may have been leaked by another website. It feebly advised users to change their passwords.

The security breach is terrible news. Users may be less inclined to use a site they no longer trust to protect their personal details. And Yahoo! Japan faces other worries. Google is catching up, revenue growth is slowing and managers are defecting to rivals. Its share price has tumbled by 50% in the past six months.