5 Companies That Had A Rough Week

The Week Ending March 4

Topping this week's roundup of companies that had a rough week is VMware, whose loss of yet another key executive is raising questions about possible turmoil amid Dell's pending acquisition of EMC, VMware's majority owner.

Also making the list were IBM (or, more specifically, IBM workers) for undergoing a round of layoffs, Nimble Storage for its tumbling stock value, Amazon for its decision to drop device encryption for its Kindle Fire tablets, and just about every leading smartphone maker for projected slower sales this year.

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.

Eschenbach's Exit Is Seen As Sign Of Ongoing VMware Channel Turmoil

VMware president and Chief Operating Officer Carl Eschenbach stepped down this week to become a partner at Sequoia Capital, an unexpected departure that solution providers saw as the latest sign of turmoil in the VMware channel sales trenches in the wake of Dell's pending acquisition of EMC.

Eschenbach's exit followed last week's news that Martin Casado, the driving force behind VMware's Nicira software-defined networking platform, was leaving -- also to take a job with a venture capitalist firm. And in January, CFO Jonathan Chadwick resigned from his post.

Several channel partners say the executive departures come as their VMware sales are flat to down while the company, which is 80 percent owned by EMC, makes changes in the sales management team for the post-acquisition era.

IBM Restructures, Lays Off Undisclosed Number of Workers

IBM, struggling to remake itself into what CEO Ginni Rometty called "a cognitive solutions and cloud platform company," issued pink slips to an undisclosed number of employees this week.

An IBM source told CRN that the percentage of IBM's 370,000 employees hit by the layoffs would be in the low single digits, which would still put the number of laid-off workers in excess of 10,000.

Smartphone Makers Face Tough Year Ahead

Smartphone vendors that have become used to double-digit sales growth are in for a tough 2016, if a report from market research firm IDC released this week is right.

The report forecasts that smartphone shipments will grow only 5.7 percent this year, compared with the 10.4 percent growth manufacturers like Apple and Samsung enjoyed in 2015. The news is especially bad for makers of Windows Phone devices, for which shipments are expected to decline a whopping 18.5 percent, and Apple, with shipments of iOS devices forecast to be down by 0.1 percent. Android smartphone shipments will grow 7.6 percent, according to the report.

Consumers aren't upgrading their phones so frequently as wireless carriers back off from providing hardware subsidies. But solution providers say a slower pace of innovation by smartphone designers also means fewer reasons for consumers to trade up. Manufacturers like Apple and Samsung will need to step up their mobile device innovation to accelerate sales, they say.

Nimble Storage Shares Hammered On Weak Outlook, Stock Downgrades

Shares of storage device maker Nimble Storage fell as much as 20 percent Friday after the company issued weak revenue guidance for the current (first) quarter and Wall Street analyst firms J.P. Morgan and Piper Jaffray lowered their recommendations on the stock from "overweight" to "neutral."

Nimble reported results for its fourth quarter Thursday and sales came in ahead of expectations at $90.1 million. But its revenue forecast for the current quarter of $83 million to $86 million raised questions about the storage system vendor's ability to grow its sales.

Nimble's shares were down almost 20 percent, to $6.64, around the start of trading Friday. By 3 p.m. they had rebounded somewhat to $7.40 -- still down about 10 percent.

Amazon Takes Heat For Removing Encryption From Kindle Fire Tablets

Amazon acknowledged this week that it disabled the encryption capabilities of its Android-powered Kindle Fire tablets, a curious move given the fierce debate between Apple and the FBI.

Amazon said it decided to disable the device encryption option in Fire OS 5, the latest release of the operating system that powers the tablet and Amazon smartphones, because not many people used it. While reports say some users began to notice the change last month, Amazon just confirmed it this week. Users who choose to upgrade to Fire OS 5 are told they have to forgo encryption.

That's led to a wave of criticism on the company's support forum, as well as on social media and blogs.