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5 Companies That Had A Rough Week

For the week ending October 19, CRN looks at IT companies that were unfortunate, unsuccessful or just didn't make good decisions.

The Week Ending October 19

This week's round includes companies dealing with angry shareholders, layoffs, sales slumps and lawsuits.

Facebook made the list for multiple reasons, including a lawsuit alleging the company misled advertisers and a proposal from major investors for Mark Zuckerberg to step down as chairman. But Facebook isn't the only company dealing with lawsuits or angry shareholders.

Activist investor Carl Icahn had fighting words for Dell Technologies, saying he would do "everything in my power" to stop the company's proposed stock swap with VMware to become a public company again. And Amazon was dealt a legal blow when longtime rival eBay filed a lawsuit against the e-commerce giant for allegedly poaching sellers using an internal messaging system.

But not everyone was having a bad week. For that, check out CRN's roundup of 5 Companies That Came To Win This Week. In the meantime, let's look at what made this week so rough for the unlucky few.


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Carl Icahn Declares War With Dell

Activist investor Carl Icahn can't stop, won't stop fighting against Dell Technologies' proposed stock swap with VMware to become a public company again. In an open letter to shareholders Monday, Icahn revealed that he is the second largest shareholder in the company's DVMT tracking stock and said he intends "to do everything in my power to stop this proposed DVMT merger." Icahn said he is soliciting for votes against the deal and is evaluating alternative transactions.

In response, Dell told CRN that the company believes the proposed DVMT merger "is fair and in the best interests of DVMT shareholders." Dell added: "The transaction offers DVMT shareholders an opportunity to hold a direct economic interest in Dell Technologies. … The transaction also offers DVMT shareholders seeking liquidity $9 billion in aggregate cash consideration." The Round Rock, Texas-based company set the date for its shareholder vote on the deal for Dec. 11, 2018.


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IBM's Growth Streak Comes To An End

IBM's growth streak ended in the third fiscal quarter as sales slumped in some key segments, the Armonk, N.Y.-based company reported on Tuesday. The company's overall revenue for Q3 was $18.8 billion, down 2 percent from the previous year. The slump was driven by a 6 percent decline in IBM's Cognitive solutions segment and a 2 percent decrease in the company's Technology Services & Cloud Platforms category. In the meantime, cloud sales reached $19 billion, a 20 percent increase from 2017.

However, the company said its strategic imperatives of cloud, mobile, analytics and social generated $39.5 billion, roughly 50 percent of IBM's total sales — which CFO James Kavanaugh said illustrated a massive transformation for the company over the last few years.


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Android Co-Founder's Smartphone Startup Has Layoffs

Essential Products Inc., the device startup launched by Android co-founder Andy Rubin, laid off about 30 percent of its staff several months after canceling the second version of its smartphone and halting development of a smart home product that would have competed with the Amazon Echo.

Bloomberg reported the news, which was confirmed by Essential. "This has been a difficult decision to make. We are very sorry for the impact on our colleagues who are leaving the company and are doing everything we can to help them with their future careers," the company told Bloomberg.


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Facebook's Security, Investor And Lawsuit Woes

Facebook dealt with a slew of issues this week, both old and new, including a new lawsuit from an online marketing agency alleging that the social network lied about its knowledge of inflated ad metrics. In the lawsuit from Crowd Siren, the agency accused Facebook of knowing that it had inflated a video ad metric as early as 2015 before acknowledging the error in September 2016, Bloomberg reported.

The social network is also facing pressure from major shareholders for Mark Zuckerberg to step down as chairman, though "the proposal is largely symbolic, since Zuckerberg holds absolute control of the board," CNBC reported. On Wednesday, The Wall Street Journal reported that Facebook determined the hacking of 30 million of its users were spammers and not foreign nation-state hackers.


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Amazon Gets Sued By eBay For Allegedly Stealing Sellers

Amazon is facing a lawsuit from longtime rival eBay for allegedly stealing sellers from its marketplace. The company's lawsuit accuses Amazon of perpetrating a "scheme to infiltrate and exploit eBay's internal member email system" for the past few years, adding that the method was employed by dozens of Amazon sales representatives, according to The Wall Street Journal.

In response to the lawsuit, an Amazon spokeswoman referred the Journal to an earlier statement, which said that the company was undergoing an extensive investigation of the allegations, from when eBay sent a cease-and-desist letter to the company in early October making the same claims.

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