5 Companies That Had A Rough Week

The Week Ending Sept. 11

Topping this week's roundup of companies that had a rough week are Hewlett-Packard and Dell, which stirred up a hornet's nest among their channel partners when they announced a plan to sell Microsoft's Surface Pro device direct to customers.

Also making the list are the latest health-care insurance provider to be hit by a cyberattack; distributors who learned just how bad sales have been this year; disk drive maker Seagate and its layoff of more than 1,000 workers; and Amazon and its failed Fire Phone product.

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 5 Companies That Came To Win roundup.

Dell, HP Partners Stunned By Microsoft Surface Pro Reseller Plan

Dell and Hewlett-Packard found themselves scrambling this week to respond to a backlash from partners after the vendors disclosed a deal to directly sell Microsoft's Surface Pro device, a move that puts the companies in direct competition with the channel.

"This is a direct assault on Dell and HP channel partners," a frustrated top executive for a national enterprise partner that works with all three vendors told CRN. "Dell and HP have some explaining to do to their loyal channel partners."

The vendors didn't initially comment on the impact the plan would have on the channel. Later in the day after the announcement, HP Vice President Mike Nash said it was "absolutely not a slap in the face to our channel." A day later, Dell Vice President of Global Strategy Frank Vitagliano told CRN that the company would "respond directly to partners" about their concerns. Microsoft told partners the plan was targeted toward enterprise deals and insisted that Surface Pro resellers would be able to compete with Dell on pricing. The vendors' slow responses did little to quell the channel uproar over the issue.

Excellus Blue Cross Blue Shield Hit By Cyberattack

Excellus, a Blue Cross Blue Shield affiliate in upstate New York, became the latest security breach victim this week when the health-care insurance company disclosed that it had been hit by "a very sophisticated cyberattack" that compromised the records of about 10.5 million members.

The company said the attack had been occurring since Dec. 23, 2013, and was discovered on Aug. 5, 2015. Records potentially exposed included subscriber names, Social Security numbers, birth dates, mailing addresses, phone numbers, financial account information and claims data.

Excellus is the latest victim of a string of high-visibility attacks against health-insurance providers this year. Other companies hit by cyberattacks include Anthem, Premera and CareFirst.

Distributors Get The Bad News About Their 2015 Performance

Distributors already knew that the first half of 2015 has been marked by slow sales growth. Data presented at the Global Technology Distribution Council meeting this week illustrated just how slow.

GTDC chairman Tim Curran, presenting data from NPD Group, said distributors saw their U.S. hardware and software sales grow just 2.9 percent in this year's first quarter, and 4.2 percent in the second quarter -- a marked contrast to the 5.5 percent-plus growth distributors saw in all four quarters of last year.

A major reason behind the slow growth was significant declines in sales of PCs and tablet computers in the first half of 2015. PCs experienced sharp declines in year-over-year sales between March and May, following 14 consecutive months of impressive revenue growth, Curran said. And sales of tablet computers significantly fell off between December 2014 and April of this year.

Seagate Laying Off More Than 1,000 Workers

Distributors aren't the only companies suffering from the PC market slowdown. Disk drive and storage system developer Seagate Technology is laying off 1,050 employees, about 2 percent of its global workforce, as part of a restructuring plan to reduce costs in the wake of sluggish PC sales.

The restructuring plan is expected to save the company about $113 million annually, according to a Seagate filing with the U.S. Securities and Exchange Commission. It will result in charges of roughly $53 million, incurred primarily in the September quarter.

The layoffs are equally divided between the U.S. and the rest of the world with approximately 100 in Silicon Valley, according to a SiliconBeat story. A Denver Post story said about 70 would be laid off from a Seagate facility in Longmont, Colo.

Amazon Discontinues Failed Fire Phone

Amazon.com has had success in many areas, from online retail sales to Amazon Web Services. But don't count the Amazon Fire Phone among them. This week, Amazon discontinued sales of its Amazon Fire Phone after finishing off its inventory of the mobile devices and telling MarketWatch it had no plans to manufacture any more.

Earlier in the week, websites such as GeekWire and The Verge reported the end of Amazon's failed effort to market its own smartphone. Amazon launched the Fire Phone in mid-2014, but it was a poor seller from the start and, in October, the company took a $170 million write-down for unsold inventory.