5 Companies That Had A Rough Week1:00 PM EST Fri. Sep. 13, 2013
Five companies that had a rough week this week include Carl Icahn's lost battle against Michael Dell, a leading IT company that was dropped from the Dow Jones Industrial Average index, Microsoft's latest effort to boost Surface tablet sales, a telecommunications company hit with a security breach and a botched Microsoft software update.
Also, be sure to check out our roundup of 5 Companies That Came To Win This Week.
Activist investor Carl Icahn this week gave up his long-running battle to stop Michael Dell's $24.8 billion plan to take the computer maker private. Icahn ran up the white flag after a failed legal battle in a Delaware court to stop a decision by Dell's board to accept Michael Dell's improved offer.
In an 800-word open letter signaling his surrender, Icahn at times took swipes at Michael Dell, calling him a "dictator" and at other times congratulating him on a hard-fought battle. "We therefore congratulate Michael Dell and I intend to call him to wish him good luck (he may need it)," Icahn wrote.
But is Icahn really a loser here? He owned a significant stake in Dell and Reuters calculated he stands to earn $10.7 million from his investment. The Wall Street Journal quoted "a person familiar with [Icahn's] investment" as putting his potential profit at some $70 million. Either way, not a bad way to lose.
Microsoft this week said it would give at least $200 credit toward the purchase of a Microsoft Surface tablet or other Microsoft products to consumers who trade in their iPads. Under the offer, which applies to "gently used" iPad 2, 3 or 4 tablets, owners must bring the devices into a Microsoft retail store for evaluation. The offer expires Oct. 27.
Given that Surface sales have been disappointing, to say the least, is it realistic for Microsoft to expect that many iPad owners will switch to Surface? The marketing effort is further evidence Microsoft is trying to compete head-to-head with Apple, a battle that observers have said will be a tough one for Microsoft to win.
Microsoft has cut prices of both its Surface Pro and Surface RT tablets in an effort to boost prices. Sales of both models totaled $853 million in fiscal 2013 and the company took a $900 million charge against fourth-quarter earnings for unsold Surface RT inventory.
Hewlett-Packard, part of the Dow Jones Industrial Average since 1997, was dropped from that index this week because its share price has fallen too low. The change signifies that HP has recently been out of step with the overall stock market and with the U.S. economy, which the DJIA is designed to mimic.
Independent industry analyst Carter Lusher said HP was dropped from the index because of its focus on commodity technology and its slow pace of change that doesn't reflect the more dynamic economy.
German mobile phone operator Vodafone acknowledged this week that hackers gained access to a system with the personal information of at least 2 million customers in Germany. The security breach occurred last week.
The accessed information included names, addresses, birth dates, gender and account numbers, but not credit card information or passwords, Vodafone said. The accessed information is valuable for identity thieves who can use it for phishing attacks and other nefarious activities.
While a suspect is in custody, the breach shows that despite widely publicized attacks, many businesses haven't taken all steps necessary to protect customer data. Vodafone said it is now adding network improvements and other security measures -- better late than never.
This week's "Patch Tuesday" offerings from Microsoft included a nonsecurity update for Office 2013 that caused headaches for Outlook users. Microsoft pulled the update after getting reports the update caused the folder list in Outlook to disappear.
Microsoft urged users to uninstall the update, KB 2871630, while it works on a correction.
The problem is the latest of several recent software updates that have caused problems for users. That's brought criticism from analysts about the vendor's quality-control processes. There were also reports that Microsoft was slow in responding to reports about this latest problem.