Bad week for 5 companies
The Week Ending Oct. 30:
Topping this week’s roundup of companies that had a rough week is IBM, which reported that the U.S. Securities and Exchange Commission is investigating its revenue recognition practices.
Also making the list were Symantec, which is under fire from Google for allegedly developing fake SSL digital certificates for testing; Black Box Network Services’ poor Q2 sales results; Xerox, which launched an operations review after a Q3 loss; and word that VMware’s cloud chief won’t be part of the new EMC-VMware cloud services business.
Not everyone in the IT industry was having a rough go of it this week. For a rundown of companies that made smart decisions, executed savvy strategic moves – or just had good luck – check out this week’s Companies That Came To Win roundup.
IBM Under SEC Investigation For Revenue Recognition Practices
IBM disclosed this week that the Securities and Exchange Commission is investigating the company’s revenue recognition practices relating to how the company accounted for certain transactions in the U.S., U.K. and Ireland. IBM said it learned of the investigation in August and disclosed the information in a filing with the SEC Tuesday.
In the filing, IBM said it is cooperating with the investigation but provided no additional details.
Shareholders certainly weren’t happy with the news: The price of IBM stock dropped 4 percent from its Monday close of $143.66 to $137.86 at the close of trading Tuesday.
Symantec Taken To Task By Google For Questionable Web Certificates
Google criticized security vendor Symantec this week for allegedly creating fake SSL digital certificates for testing purposes. Such certificates, if released or stolen, could allow attackers to impersonate Web pages from Google and other online companies, leaving them open to cyber attacks and data theft.
Google, in a blog post by software engineer Ryan Sleevi, demanded that Symantec provide a more through analysis of the problem, take corrective steps and be more transparent in how it handles certificates — or face having Symantec-backed certificates be branded potentially unsafe by Google’s Chrome Web browser and other Google applications starting in June 2016.
Symantec has issued an incident report acknowledging that employees at its Thaw subsidiary had inappropriately issued test certificates. Some employees reportedly have been fired because of the incident.
Black Box Reports $130M Q2 Loss, CEO Takes Sales Force To Task
Black Box Network Services reported shrinking sales and a $129.8 million loss for its second fiscal quarter this week and the Pittsburgh-based solution provider’s sales operations got a tongue-lashing from the CEO for the lousy results.
Sales for the quarter declined 5 percent year over year to $237 million. The company reported lower-than-expected bookings after losing a large federal contract it was counting on and sales from the core commercial services business also dropped.
Black Box’s sales force has been undergoing a restructuring in the last year, but on the company’s earnings call CEO Michael Mc Andrew said that effort had yet to result in improved revenue or bookings. The CEO called the Q2 sales a “disappointing performance” and “unacceptable.” While the company doesn’t expect a sales rebound in the current fiscal year, Mc Andrew remains committed to the sales realignment effort.
Xerox Launches Operations Review After $34M Q3 Loss
Black Box wasn’t the only company dealing with poor financial results this week. Xerox said it would launch a review of its operations after the company reported a $34 million loss and 10 percent revenue decline in its third quarter.
While the loss and revenue decline were in line with expectations, the drop in sales was the company’s worst since 2009. The company’s technology and services divisions both recorded steep sales declines.
Xerox directors have authorized a review of the company’s operations, including its business portfolio and capital allocation, in an attempt to turn things around.