5 Companies That Had A Rough Week
The Week Ending June 10
Topping this week's roundup of companies that had a rough week is Cisco, for the departure of some key engineering executives amid a reported internal power struggle at the company.
Also making the list were Dimension Data, for the sudden departure of its CEO; Oracle, for reported recent problems with its ability to meet capacity demands for its cloud services; PC vendors, for the worsening sales outlook; and Akamai, for its payment to the SEC to settle a bribery case.
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.
Cisco Losing Top Engineers
Four of Cisco's top engineers are leaving the giant networking equipment maker after an internal reorganization that some partners say has created a power struggle between CEO Chuck Robbins and longtime company executives.
This week the company said that Soni Jiandani, Mario Mazzola, Prem Jaim and Luca Cafiero -- all Cisco engineering executives who led some of the company's key "spin-in" research and development efforts -- are leaving June 17. Mazzola, Jaim and Cafiero were demoted to advisory roles last week.
The exit of the four executives is part of what partners said is an internal power struggle, sparked by Robbins' decision in March to reorganize the company's 25,000-strong engineering operations. Last week CRN reported that Nick Earle, who played a key role in developing Cisco's cloud and intercloud strategy, was leaving the company.
Dimension Data CEO Resigns
Speaking of top executives heading for the exit, Brett Dawson, CEO of solution provider giant Dimension Data, resigned this week after 12 years of running the company, No. 11 on the CRN 2016 Solution Provider 500.
Dawson said he was stepping down to pursue other interests. The company named Chief Operating Officer Jason Goodall to take on the CEO job.
Dimension Data was acquired by NTT in 2010, and in February, NTT Senior Executive Vice President Jun Sawada told financial analysts that NTT was pursuing "cost efficiency and profit and revenue enhancements" within the Dimension Data business.
Sources Say Oracle Customers Impacted By Cloud Capacity Shortage
Oracle's reputation as a leading cloud service provider took a bit of a hit this week when multiple sources told CRN that the vendor recently experienced a cloud computing capacity shortage for its Infrastructure-as-a-Service and Exadata Database-as-a-Service offerings.
The sources said some large customers were unable to redeem "cloud credits" or licenses for Oracle cloud services last month before they expired May 31. Oracle's sales teams sold a significant amount of cloud services before the May 31 end of Oracle's fiscal year. But sources said the company provisioned compute and storage capacity based on the amount sold, not actual usage, leading to the capacity issues.
It's not clear how many customers were affected and whether the capacity issues are ongoing.
Outlook For PC Industry Worsens
PC industry players got some bad news this week when market researcher IDC said it expects worldwide PC shipments in 2016 to decline by 7.3 percent, a bigger drop than earlier projections. In March, IDC forecast a 5.4 percent decline in worldwide shipments this year.
IDC said weak currencies, depressed commodity prices, political uncertainty and delayed IT projects continue to constrain demand for desktop and notebook PCs. IDC now believes that for all of 2016 the industry will ship 255.6 million units.
Shipments declined 11.5 percent in the first quarter, the fourth consecutive quarter of double-digit declines. But IDC is forecasting "progressively smaller declines through 2017" with "stable volume" in 2018.
Akamai Technologies Pays $672K In China Bribe Case
Internet services company Akamai Technologies will pay $652,452 plus $19,433 in interest to settle a case with the U.S. Securities and Exchange Commission involving a $40,000 bribe paid to Chinese officials to purchase internet services.
According to an SEC statement released Tuesday, Akamai's foreign subsidiary arranged the payment "to induce government-owned entities to purchase more services than they actually needed." The SEC said employees at the subsidiary violated Akamai's own written policies "by providing improper gift cards, meals, and entertainment to officials at these state-owned entities to build business relationships."
Akamai self-reported the misconduct to the SEC and "cooperated extensively" with the investigation, according to the statement. Akamai is paying the $652,452 "ill-gotten gains" plus interest in the case under what the SEC calls a non-prosecution agreement. The agreement says that because the incident was self-reported and Akamai cooperated with the investigation, the company was not charged with violations of the Foreign Corrupt Practices Act and is not paying any punitive fines in the case.