5 Companies That Had A Rough Week

The Week Ending Oct. 14

Topping this week's roundup of companies that had a rough week is Samsung, which said that it is discontinuing the Galaxy Note 7 smartphone after a growing number of reports of the smartphone catching fire and exploding.

Also making the list were Fortinet, for problems with its sales and earnings forecast; Xerox, for getting hit with a lawsuit opposing its plan to split into two companies; HP Inc., which said it would cut up to 4,000 jobs as part of a restructuring; and Yahoo, which could see its acquisition by Verizon in jeopardy after comments by the telecom giant's top lawyer.

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.

S amsung Discontinues Galaxy Note 7 Smartphone, Halts Production

After an increasing number of reports of Galaxy Note 7 smartphone replacements catching fire and exploding, Samsung this week waved the white flag and said it was halting all production of the defective devices and would discontinue the product line.

The move is the latest step in what has been a marketing nightmare for the IT giant.

Samsung is now undertaking the Herculean task of recalling more than 2.5 million Galaxy Note 7 units. That includes providing customers with fire-proof "thermally insulated" return kits – complete with safety gloves – for returning the phones.

The entire debacle will cost Samsung billions of dollars -- $9.5 billion in lost sales alone, according to a Nomura Securities estimate. Still unclear is just how much damage has been done to the vaunted Samsung brand.

Fortinet Fumbles Financial Forecast

Security technology developer Fortinet has had a turbulent year with restructuring, layoffs and executive departures – particularly in the company's sales and marketing operations.

This week the company ran into trouble when it disclosed that sales, billings and earnings for its third quarter would come in well below Wall Street expectations. Billings are now expected to be in the range of $343 million to $348 million, down from earlier guidance of $373 million to $376 million. And revenue estimates now stand at $311 million to $316 million, down from earlier forecasts of $319 million to $324 million.

The company blamed longer sales cycles and "sales execution challenges" in North America. Executives said later in the week that they remain confident they can fix the sales execution problems and retained a positive outlook on long-term growth prospects.

Investor Sues Xerox Over Plan To Split Company

Xerox's move to split into two companies hit a bump this week when one of the copier and document management software company's biggest individual investors sued to block the plan to spin off Xerox's managed services business into a new entity, Conduent Inc.

Darwin Deason, who owns 6.1 percent of Xerox stock, sued Xerox in U.S. District Court in Dallas, according to a Reuters story. Deason is the company's largest individual investor and fourth largest overall, the story said.

Conduent would include the operations of Affiliated Computer Services, a company Deason founded and was acquired by Xerox in 2010 for $6.4 billion. Deason received preferred Xerox stock as part of that deal, Reuters said, and he opposes the split because his stock will wind up in the less valuable legacy business.

Xerox issued a statement alleging the lawsuit is without merit and will try to get it dismissed, according to Reuters.

HP Inc. Plans 4,000 Job Cuts In Multiyear Restructuring

Restructurings and cost-cutting efforts may be necessary, but that doesn't make them any less painful for the companies, and especially for the employees losing their jobs.

This week PC and printer maker HP Inc. said it will cut up to 4,000 jobs across multiple divisions in the next three years as part of a restructuring plan disclosed Thursday.

The cuts come as the vendor grapples with sluggish demand for PCs and printers. While the cuts will save the company $200 million to $300 million a year beginning in fiscal 2020, HP Inc. stock dropped about 2 percent in after-hours trading on the news.

Reports: Verizon Says Yahoo Hack Could Block Acquisition

Verizon's top lawyer says the massive data breach of Yahoo email accounts in 2014 could impact the telecommunication giant's plans to buy the technology company, according to published reports.

Craig Silliman, Verizon's general counsel, told reporters at a roundtable in Washington that the data breach, which impacted more than 500 million of Yahoo's user accounts, could trigger a clause in Verizon's agreement to buy Yahoo that would allow Verizon to walk away from the deal, Reuters reported Thursday.

In July, the two companies agreed to a $4.83 billion deal.

In a statement provided to several media outlets after Silliman's comments, Yahoo expressed confidence in the company's value and said "we continue to work toward integration with Verizon."