March 24, 2008 3:46 PM PDT

Netflix glitch to delay deliveries

Posted by Greg Sandoval

Update at 6:15 p.m. PDT to add areas that may likely see delays in delivery.

Update at 7:55 p.m. to reflect that the site has since come back online.

Netflix customers expecting a little red package soon may be disappointed.

The largest online video-rental service has suffered a technical glitch that has knocked out its Web site as well as its logistics and delivery systems, according to a Steve Swasey, a company spokesman.

The malfunction, the source of which the company won't reveal, began at about 7 a.m. PDT. The site came back online about 12 hours later, but the malfunction caused Netflix to miss the deadline to mail a large number of shipments scheduled to go out on Monday--affecting customers across the United States, according to Swasey. "We did send some shipments, but most of them will go out on Tuesday."

Swasey declined to specify what percentage of the company's more than 7.5 million customers would be affected.

The blackout was the second longest in company history. In July, Netflix suffered an outage that lasted longer than 18 hours. On that day, the company's shares fell 7 percent as the market punished Netflix for a drop in customers.

This time, the glitch came as Netflix's customer numbers are on the rise and its stock is soaring. Stock analysts upgraded Netflix on Monday, and the company closed trading at $38.18, up 5 percent. Over the past six months, the company's shares have doubled in value.

One of the differences between the two outages is that Netflix's logistics and shipping systems were not affected in July. With the more recent glitch, Netflix continued to ship DVDs but that changed sometime Monday afternoon.

(Credit: Screenshot of Netflix HTML source featuring deleted sentence)

In a message posted to its site, Netflix told customers not to worry because the company's "distribution centers are still sending and receiving DVDs." A check of the site's HTML source showed that the company rendered that sentence invisible sometime later.

"Our engineers have been feverishly working on repairing the problem all morning," Swasey said. "It was an unanticipated, unplanned outage, and we apologize to our customers."

Site outages are typically not a big deal, and any company can suffer one. But a blackout that lasts for more than an hour is rare, and one spanning several hours is rarer still.

Netflix, which has 7 million subscribers, said that customers needn't worry about their stored movie picks. None of their information will be lost.