5 Companies That Had A Rough Week
The Week Ending March 1
Topping this week's roundup of those having a rough week is Huawei, which found itself in a U.S. court this week facing charges of trade secret theft and wire fraud.
Also making the list this week are Windstream for its bankruptcy filing, Nutanix for a plunge in its stock price that cut its market cap by nearly one-third, SAP for facing allegations of bribery in Africa, and the Pentagon—and everyone else connected to the troubled JEDI cloud services contract—for continued delays in that contract's awarding.
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.
Huawei Faces Charges Of Trade Secret Theft, Wire Fraud
Chinese telecommunications giant Huawei pleaded not guilty this week to a 10-count indictment in U.S. federal court in Seattle, including charges of trade secret theft, conspiracy, obstruction of justice and seven counts of wire fraud.
The charges were brought by the U.S. Department of Justice against two Huawei divisions, Huawei Device Co. Ltd. and Huawei Device Co. USA, charging them with theft of trade secrets from wireless carrier T-Mobile.
A trial is set for March 2, 2020.
Huawei has been at the center of mounting political and trade tensions between the U.S. and China. It was also a rough week for Huawei CFO Meng Wanzhou, who faces extradition to the U.S. to face charges of violating U.S. sanctions on Iran after Canada this week said an extradition hearing in the case will proceed.
Windstream Files For Bankruptcy In Effort To Reorganize Its Finances
Windstream, the financially struggling provider of networking and communications solutions, filed for Chapter 11 bankruptcy protection this week.
In the Feb. 25 filing in the U.S. Bankruptcy Court for the Southern District of New York, Windstream said it has more than 100,000 creditors including U.S. Bank National Association with a claim of more than $1 billion in bond debt, AT&T with a claim of more than $49.55 million, Verizon with a claim of $34.05 million and CenturyLink with a claim of more than $7 million.
The move came after Windstream lost a court battle with U.S. hedge fund Aurelius Capital Management, a Windstream bond holder. A federal court in New York ruled last Friday that Windstream defaulted on its bonds in 2015 when it spun off some of its telecom assets into a company called Uniti Group. The court ruled that Windstream owes Aurelius $310 million.
Windstream said the bankruptcy filing will allow the company to continue operating while reorganizing its finances.
Nutanix Stock Plunges, Cutting Company's Market Cap By One-Third
Nutanix, a pioneer in the hyper-converged infrastructure arena, saw its market capitalization shrink—literally overnight—from roughly $9 billion Thursday to about $6 billion Friday morning.
After closing at $50.09 per share Thursday, and a market cap of $8.97 billion, the value of Nutanix's stock plummeted in after-hours trading and opened at $36.76 Friday morning. Later in the day the company's stock stabilized in the $34 to $35 per share range, giving the company a $6.2 billion market cap.
The stock price stumble came after Nutanix's fiscal second earnings report, which included solid results but weak guidance for the third quarter. Company executives cited inadequate spending for marketing and lead generation and slower hiring of sales staff for the expected third-quarter results.
Pentagon: JEDI Cloud Contract Award May Be Delayed
It was a tough week for the U.S. Department of Defense, and pretty much everyone associated with the $10 billion JEDI cloud computing contract, when the Pentagon acknowledged that Oracle's lawsuit challenging the bidding process and an investigation probing potential conflicts of interests may delay the awarding of the contract.
As recently as the end of December, the Pentagon had set April as the deadline for awarding the massive contract. But this week a DoD spokesperson said that an investigation of potential conflicts of interest and "protest litigation activities generally, are expected to impact the award date." The latter refers to a lawsuit filed by Oracle challenging the Pentagon's decision to award the entire JEDI contract to a single provider.
While many assumed that the litigation and investigation could delay the JEDI contract award, the statement by the DoD this week was the first official acknowledgement that there will be delays.
SAP Facing Graft Probe In East African State Contracts
SAP and Twenty Third Century Systems, an SAP partner in Africa and the Middle East, are being investigated by U.S. authorities for alleged graft relating to state contracts in Kenya and Tanzania in 2014 and 2015, according to a Bloomberg report.
SAP confirmed the investigations in an emailed statement to Bloomberg, which quoted SAP as saying the company and its partner have since made management changes and strengthened compliance policies.
The allegations were first reported by South African website TechCentral, which said the alleged bribery involved an ERP application contract with the Tanzania Ports Authority.
The new allegations come more than a year after SAP acknowledged its involvement in bribery payments totaling $9.2 million to companies in South Africa linked to the influential Gupta family.