5 Companies That Had A Rough Year In 2015

Looking Back At 2015

Sure, every IT company makes the occasional wrong move. But then there are the vendors, either because of their own missteps, changing market conditions, bad luck – or some of all three – find themselves in a bad position.

This year had its share of such companies. We could have cited Microsoft's $7.6 billion write-off for its Nokia acquisition or the stumbles it made with channel partners in shipping Windows 10 (free upgrades, anyone?). Or we could mention Cisco's failed Invicta storage initiative. Or point to the sudden shutdown of startup Nebula that raised questions about the viability of OpenStack.

Here's our take on five companies and organizations that really had it rough in 2015.

Federal Office Of Personnel Management Hit With Massive Security Breach

Reports of cyberattacks and security breaches were a regular occurrence in 2015. But no organization came under more fire for mismanaged data security than the U.S. Office Of Personnel Management.

In June the office disclosed that it had been hacked, not once, but twice, going back to early 2014, exposing sensitive background information on federal government workers, contractors and people seeking security clearances. Exposed information included Social Security numbers, residency and educational history, employment history, information about immediate family and other personal and business acquaintances, health, criminal and financial history, and even fingerprints.

Initially the number of affected people was put at 4 million. But that quickly grew to 18 million as the investigation continued and by July the number had reached 21.5 million. The organization was widely criticized for its poor data protection practices and its slow response to the attack. OPM director Katherine Archuleta resigned on July 10.

Unisys Struggles To Turn Itself Around

By the end of 2014 Unisys had reported declining sales for several years and, in 2013 and 2014, losses in four out of eight quarters (but net income in positive territory for both years). Ed Coleman had stepped down as CEO in December and the company, No. 19 on the CRN Solution Provider 500, began 2015 under new management with Peter Altabef taking over as president and CEO on Jan. 1.

But a turnaround for Unisys remained elusive in 2015. The company continued to rack up quarterly losses – a total of $111.0 million in the first nine months of the year on a 9 percent revenue decline. In April the company announced a $300 million restructuring initiative and plans to lay off 8 percent of the company's workforce.

By year's end Unisys executives said the company's cost-reduction plan was on track. But in a third-quarter conference call with financial analysts in late October, Altabef acknowledged that Unisys' turnaround was going to take time. The company's stock lost more than 62 percent of its value in 2015.

VMware: A Year Of Missteps And Uncertainty

VMware remained a steady money-maker in 2015, recording more than 8 percent sales growth in the first nine months of the year and 11 percent net income growth. But beyond the company's income statement, it was a turbulent year for the virtualization technology leader.

In March the U.S. Defense Department canceled a proposed five-year, $1.6 billion enterprise licensing agreement. In June VMware and channel partner Carahsoft agreed to pay a $75.5 million fine to settle a lawsuit alleging the companies overcharged the federal government for VMware products and services. And in October Apple reportedly decided against renewing a VMware licensing agreement, opting instead for open-source KVM.

But VMware's biggest problem was the uncertainty created by Dell's planned $67 billion acquisition of EMC, which owns 80 percent of VMware. While Dell and EMC executives swore that VMware was a key part of the Dell-EMC combination, VMware's stock value plummeted after the deal was announced.

VMware's perceived limbo status wasn't helped by EMC's $1.2 billion acquisition of Virtustream, whose technology competes with VMware's vCloud Air. In December VMware backed off a plan to participate in an EMC-Virtustream venture, creating even more uncertainty and confusion.

NetApp Wrestles With Declining Sales, Management Turmoil

In March Brian Pawlowski, senior vice president and 20-year NetApp veteran who was overseeing the company's all-flash storage development, left to take a job with Pure Storage. It was the start of what would be a tumultuous year for NetApp.

Throughout the year the company struggled with declining revenue, including shrinking channel sales, which the vendor blamed on slow customer transition to its Clustered Data OnTap storage systems. In May it disclosed plans to lay off some 500 employees or about 4 percent of its workforce. And in August the company reported a $30 million loss for its first fiscal quarter.

In June the company fired CEO Tom Georgens, naming George Kurian, executive vice president of product operations, to replace him. At year's end, in a gutsy bid to reverse its fortunes, NetApp struck a deal to acquire Solidfire, an all-flash storage array startup, for $870 million.

Lenovo Losing Its Mojo?

By the end of 2014 Lenovo seemed ready for liftoff. Already an industry heavyweight in PCs, the company was integrating its IBM x86 server and Motorola smartphone acquisitions and appeared set to gain share in multiple market segments.

But the company, hit hard by the worldwide slowdown in PC sales, stumbled in this year's first fiscal quarter and reported a 51 percent plunge in net income. The company quickly began implementing a cost-cutting plan that included laying off 3,200 employees or about 5 percent of its workforce. In November Lenovo reported a second-quarter loss of $714 million.

Lenovo also lost some goodwill with customers early in the year when it came under fire for loading Superfish adware on its PCs, software that critics said could be used to eavesdrop on user communications.

In August Jay Parker, senior vice president of Lenovo's enterprise group, abruptly resigned after holding the job for only six months. And in December Lenovo founder Liu Chuanzhi dropped none-too-subtle hints that he was losing confidence in CEO Yang Yuanqing to lead the company.