5 Companies That Had A Rough Week

The Week Ending Nov. 6

Topping this week's roundup of companies that had a rough week is the blowback that hit Microsoft after the company revealed it was rescinding its year-old offer of unlimited cloud storage for Office 365 consumer users.

Also making the list was Virtual Instruments and its employees following significant layoffs, Symantec executives who were on the hot seat at the company's annual shareholder meeting, Systemax's latest bad financial news, and CDW's disclosure about an SEC investigation.

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.

Microsoft Hit After Backtracking On Unlimited Office 365 Storage Pledge

Microsoft found itself on the defensive this week after the vendor said that effective immediately it would no longer offer unlimited storage to subscribers running Office 365 Home, Personal or University versions, capping those accounts at 1 TB.

The move reversed an offer from October 2014 to let Office 365 consumer users store an unlimited amount of data on their OneDrive accounts. In a blog post, the OneDrive team said it was reversing course because a small number of users abused the service to back up multiple PCs and store large volumes of movies and DVR recordings.

Customers responded with a torrent of angry comments on the blog page, Twitter and elsewhere. Many vowed to take their cloud storage business to Google Drive, Dropbox and other sites. Some even said they would stop using other Microsoft products.

"So businesses are supposed to trust Microsoft’s cloud platforms for their mission-critical data when MS cannot even get their OneDrive cloud service straight," wrote DarenD in one example. "The big problem here is the lack of truthful communication from MS."

Virtual Instruments Cuts Two-Thirds Of Its Staff

It was a bad week to be an employee at Virtual Instruments, a seven-year-old startup led by Microsoft Chairman John Thompson (pictured). Sources told CRN that the company has laid off nearly two-thirds of its staff in the past month as part of a shift to a cloud subscription model.

Virtual Instruments sells an integrated hardware/software appliance that provides real-time visibility into the operations and performance of virtualized environments.

The San Jose, Calif.-based startup laid off close to one-third of its staff of around 300 employees in mid-October, and then let go about the same number in a subsequent round of cuts last week, bringing employment down to about 100.

"We were put in a position where we were anticipating ongoing funding that did not occur, and we had to make hard decisions. Our primary goal is continuing to serve our customers and partners," Marketing and Alliances Vice President John Gentry said, confirming the layoffs.

Symantec Execs On The Defensive As Shareholders Push For Results

Symantec CEO Michael Brown faced tough questions at the company's annual stockholders meeting where shareholders asked when they could expect to see results from the security vendor's ongoing turnaround efforts.

"Given that security is a growing need and an increasing problem with threat attacks, how is it that the business is not growing substantially?" one shareholder asked. "I think there are problems here that I think are not being addressed and I'm not satisfied," he said.

"Over the past one-, two-, five- and 10-year periods, Symantec has substantially underperformed the market," another shareholder said.

Symantec began a turnaround of its product and go-to-market strategies under former CEO Steve Bennett, who was fired 18 months ago, and continues under Brown. He told shareholders the company is working hard to turn around its enterprise and consumer businesses and plans to launch a dozen new products in the coming months.

CDW Discloses SEC Investigation Of Company's Vendor Partner Program Incentives

Solution provider CDW disclosed this week that the U.S. Securities and Exchange Commission is conducting an investigation of the company's vendor partner program incentives.

In a 10-Q filing CDW said that on Oct. 29 it received a request from the SEC for documents relating to the program incentives as part of the investigation. "We are cooperating with this matter," the CDW 10-Q said, without disclosing additional details.

"Vendor incentives are a very important contributor to reseller profitability, and CDW historically has generated above-peer gross/operating margins, in part, because of its success in generating strong results from vendor incentive programs," said Raymond James analyst Brian Alexander in a research note about the disclosure. "CDW has a long history of generating strong margins, and nothing in its recent results strikes us as out of the ordinary. Therefore, we are not sure what prompted the investigation, and management did not provide any color on its nature or cause."

Revenue Tumbles As Systemax's Painful Restructuring Goes On

Solution provider Systemax this week reported that sales in its third quarter ended Sept. 30 plunged 18 percent to $699.3 million from $825.4 million in the same quarter one year earlier.

It was the lowest quarterly revenue the company had recorded in five years. The company's quarterly loss widened to $10.3 million from $2.8 million one year before.

Systemax, a seller of computers, computer supplies, consumer electronics and industrial products, has been traveling a rough road of late. It has been shuttering its retail business, laying off employees and restructuring its operations as its focuses on its B2B solutions.