5 Companies That Had A Rough Week

The Week Ending July 10

This week's roundup of companies that had a rough week includes the New York Stock Exchange and United Airlines' massive IT failures, semiconductor manufacturers that received bad news about the outlook for 2015 industry sales, Microsoft's $7.6 billion write-down of its Nokia acquisition, Samsung's disappointing sales and earnings due to poor smartphone sales, and the federal agency whose disclosures about a security breach just get worse and worse.

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.

NYSE, United Airlines Hit With Massive IT System Failures

Wednesday was not a good day to be a trader on the New York Stock Exchange. Or to be a passenger on a United Airlines flight.

Trading was halted on the NYSE for nearly four hours Wednesday because of problems with the Exchange's IT system. The cause was later determined to be an IT configuration issue triggered by a faulty software update.

United, meanwhile, grounded all of its flights for two hours the same day after a systemwide computer failure. The cause was later traced to a router problem that reduced network connectivity for several system applications.

While there was relief that both outages weren't caused by malicious hackers, the incidents illustrated how vulnerable complex IT systems are to failures. They also highlight how the operators of such systems often fail to properly implement built-in redundancy, fault tolerance and instantaneous failover capabilities, and to properly test those systems.

Gartner Slashes Forecast For 2015 Semiconductor Sales

Semiconductor manufacturers got hit with bad news this week when market researcher Gartner cut its worldwide semiconductor revenue forecast for 2015 to 2.2 percent growth, down from an earlier estimate of 4.4 percent.

Gartner said sales of devices that drive the semiconductor business, including PCs, smartphones and tablets, have been weaker than expected and that led to a second-quarter lag in chip sales. The market research firm now forecasts that semiconductor sales will total only $348 billion.

Earlier in the week chip maker Advanced Micro Devices slashed its revenue outlook for the second quarter ended June 27, saying sales will decline sequentially by 8 percent compared with the earlier estimate of a 3 percent drop.

Microsoft Writes Down $7.6 Billion For Nokia Purchase, Lays Off 7,800

This week Microsoft said it would record an impairment charge of about $7.6 billion related to assets associated with its April 2014 acquisition of phone manufacturer Nokia for $7.2 billion. The move essentially wipes out the value of the acquisition, which has failed to help Microsoft gain market share in the mobile phone market, noted a Bloomberg story.

It was also a bad week to be a former Nokia employee – Microsoft is cutting some 7,800 jobs, primarily in its smartphone division, and taking restructuring charges of $750 million to $850 million.

While partners said the news means Microsoft is focusing on its strengths as a software company, it's hard to see this week's moves as anything but evidence that the acquisition of Nokia just hasn't paid off.

Samsung Earnings Estimates Reveal Smartphone Struggles

Microsoft isn't the only company whose weak performance in the smartphone business became clear this week. On Tuesday Samsung posted disappointing earnings estimates for its second quarter with lackluster smartphone sales apparently to blame.

Samsung said its preliminary estimate of sales for the recently completed second quarter showed an 8 percent decline from sales in the same period one year ago and a 4 percent decline in operating profit to $6.1 billion.

Industry analysts said sales of the company's Galaxy S6 smartphones apparently fell short of expectations.

Federal Agency Security Breach More Extensive Than Originally Disclosed

The impact of the massive data breach at the U.S. Office of Personnel Management in May was bigger than previously believed.

This week the government disclosed that hackers stole sensitive personal information from 21.5 million individuals – far more than the 4.2 million federal workers and contractors cited earlier.

The government said that after deeper investigation the breach was found to have compromised the data of 19.7 million people who applied for background checks and 1.8 million others associated with those applications.

It was an especially bad week for Katherine Archuleta, the director the the Office of Personnel Management, who resigned Friday in the wake of the massive IT security failure.