5 Companies That Had A Rough Week
The Week Ending Feb. 19
Topping this week's roundup of companies that had a rough week is NetApp, which announced a plan to cut its global workforce by 12 percent in an effort to cut costs.
Also making the list were PTC and charges from the U.S. Securities and Exchange Commission in an alleged Chinese bribery case, a potentially smaller payday for EMC investors from the acquisition by Dell, an LA hospital that paid up following a ransomware attack to regain access to its IT systems, and a key executive loss for Salesforce.com
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 Five Companies That Came To Win roundup.
NetApp To Lay Off 12 Percent Of Its Workforce
It was a bad week for NetApp – and an even worse one for about 1,500 of its employees who will lose their jobs by 2017 under a cost-cutting plan announced this week.
NetApp, a manufacturer of data storage systems, said it will lay off 12 percent of its global workforce as it shifts its focus from mature technologies with declining sales to its faster growing products such as all-flash storage and the vendor's Clustered Data Ontap systems.
On Wednesday, NetApp said revenue for its fiscal 2016 third quarter, which ended Jan. 29, came in at $1.39 billion, down nearly 11 percent from $1.55 billion in the same quarter one year earlier and less than the $1.45 billion financial analysts had been expecting. Net income, meanwhile, was $153 million, down more than 13 percent from $177 million one year before. The company will take a charge of $60 million to $70 million to cover the costs of the layoffs.
PTC Pays $28 Million Fine In Chinese Bribery Case
Software developer PTC is paying more than $28 million in fines to the U.S. Securities and Exchange Commission to settle civil and criminal charges that the company allegedly bribed Chinese government officials to win contracts.
Between 2006 and 2011, two China-based PTC subsidiaries provided improper travel, gifts and entertainment totaling nearly $1.5 million to Chinese government officials who were PTC customers, according to the SEC. The travel included trips to Hawaii and Las Vegas while the gifts included wine and iPods.
PTC generated approximately $11.8 million in profits from sales contracts with the Chinese government entities where the officials worked, the SEC said. PTC is paying more than $13.6 million to settle the case while the subsidiaries are paying more than $14.5 million.
Dell Warns Investors That VMware Share Price Drop Will Impact Final EMC Deal Price
It wasn't the best of weeks for EMC shareholders counting on a big pay day once Dell completes its multibillion-dollar acquisition of EMC.
This week, Dell warned that the $14 billion decline in the market capitalization of VMware – of which EMC is an 80 percent owner – would negatively affect the total price of the deal. While the price was originally set at $67 billion, the plunge in the value of VMware shares has reduced that to $59.5 billion, according to a filing with the U.S. Securities and Exchange Commission by Denali Holding Inc., the holding company for Dell.
While Dell is committed to paying $24.05 per share for EMC stock, the deal's total value includes the value of Denali's tracking stock that shareholders will receive based on the value of VMware shares when the deal closes. The upshot is that with VMware share prices falling, the payout for EMC investors won't be as lucrative.
LA Hospital Pays $17,000 To End Ransomware Attack
Hollywood Presbyterian Medical Center forked over $17,000 in a high-profile ransomware attack this week. The hospital paid the money to hackers who injected malware into the facility's computer network that prevented employees from accessing its network, electronic health records and electronic communications.
Since Feb. 5, when the attack began, the hospital has reverted to using paper records, telephones and fax machines to continue operating.
Security experts and solution providers say the incident is a warning sign for health care organizations and businesses to develop more comprehensive security strategies.
Hollywood Presbyterian may not have had much choice in paying the ransom. But its failure to protect itself against a possible attack means that not only is the hospital a loser here, so are the future victims of the cybercriminals who are free to attack again.
Salesforce Platform VP Set To Depart
Salesforce.com confirmed this week that Tod Nielsen, the company's executive vice president of platform, is leaving the company next month to pursue other opportunities.
Nielsen's departure comes as Salesforce is juggling three development platforms: Heroku, Force.com and Lightning. Systems integrators and ISVs use the platforms to develop applications that run within the Salesforce environment. Nielsen was leading the company's critical efforts to unite the three platforms into an integrated solution originally known as Salesforce1 and more recently called the App Cloud.
Nielsen came to Salesforce in 2010 when the company acquired Heroku, where he was CEO of the pioneering Platform-as-a-Service company. It's not clear what impact his departure will have on the App Cloud effort.