5 Companies That Had A Rough Week

The Week Ending Jan. 20

Topping this week's roundup of companies that had a rough week is Arista Networks, which suffered a setback in its ongoing patent infringement battle with Cisco Systems.

Also making the list this week were Avaya for its Chapter 11 bankruptcy filing, Oracle for being sued by the U.S. Labor Department for alleged discriminatory hiring practices, Qualcomm for being sued by the Federal Trade Commission for alleged antitrust practices, and Nutanix for taking a stock price hit in the wake of the Hewlett Packard Enterprise deal to acquire SimpliVity.

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.

Arista Stock Plunges 12 Percent As It Faces Setback In Legal Battle With Cisco

Networking startup Arista Networks has hit a setback in its ongoing patent infringement lawsuit battle with rival Cisco Systems. And the news sent the company's stock tumbling 12 percent Tuesday, hitting a two-month low.

Cisco and Arista have been engaged in a heated patent infringement lawsuit battle. That resulted in a limited ban early last year on imports of Arista switching products and components that incorporated the allegedly infringing technology. That ban, imposed by the U.S. Customs and Border Protection agency, was lifted in November after the agency concluded that Arista had sufficiently redesigned its products so that they did not infringe on Cisco's patents.

But last week the agency revoked its finding because of what it described as "concerns" about whether its decision to lift the ban was incorrect and reinstated the ban pending further deliberation.

Cisco said that means Arista has lost the authorization to import or continue selling its products in the U.S. or import components to build those products. Arista said it had not yet had the opportunity to address the U.S. Customs and Border Protection agency's concerns.

Avaya Files For Chapter 11 Bankruptcy Protection

Avaya filed for Chapter 11 bankruptcy protection this week in a move the company's CEO described as "the best path forward" for the telecommunications company.

Avaya has $6 billion in debt and needs to raise $600 million for a debt maturity in October 2017. The company is seeking to reduce its debt load through the Chapter 11 process and has commenced a formal proceeding to restructure its balance sheet. The Chapter 11 bankruptcy petition was filed in the U.S. Bankruptcy Court for the Southern District of New York.

Channel partners told CRN that the Chapter 11 filing was a "solid" first step in getting the company back on track. But filing for bankruptcy is never an easy move for a business.

U.S. Labor Dept. Charges Oracle With Discriminatory Hiring Practices

Oracle was sued in federal court by the U.S. Department of Labor this week, alleging that the software giant engages in discriminatory hiring practices.

The lawsuit, which could threaten federal contracts for Oracle and its partners, alleges that Oracle pays white men more than their counterparts and favors hiring Asian applicants for technical positions at the company. The Labor Department's Office of Federal Contract Compliance Programs began looking at Oracle's employment practices in 2014.

Oracle, in a statement, said the charges are "politically motivated, based on false allegations, and wholly without merit."

FTC Charges Qualcomm With Anticompetitive Practices In Apple Dealings

Qualcomm found itself on the wrong end of a lawsuit filed by the U.S. Federal Trade Commission this week, alleging that Qualcomm forced Apple to use its semiconductors exclusively in return for lower licensing fees, unfairly cutting out competitors.

The complaint, filed in U.S. federal court, charged that Qualcomm's "anticompetitive tactics" were designed "to maintain its monopoly in the supply of a key semiconductor device used in cellphones and other consumer products," the FTC said in a statement.

"Qualcomm has used its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cellphone manufacturers and to weaken competitors," the statement said.

Qualcomm, in a statement, said the FTC's charges are "based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry." It said it plans to "vigorously contest" the complaint and defend its business practices.

Nutanix Shares Take A Hit On HPE-SimpliVity Acquisition Deal

Hewlett Packard Enterprise's deal to acquire hyper-converged system maker SimpliVity was apparently seen on Wall Street as a competitive blow to Nutanix, a SimpliVity rival in the competitive hyper-converged infrastructure market.

The price of Nutanix stock fell $1.88, or more than 6 percent, to $28.17 Wednesday as investors assessed the potential impact of the HPE-SimpliVity deal. Smaller players have traditionally dominated the hyper-converged market and investors were apparently reacting to the potential impact of HPE becoming more competitive in the hyper-converged arena.

Shares of Nutanix stock continued to hover a little above $28 for the rest of the week.