5 Companies That Had A Rough Week

The Week Ending March 3

Topping this week's roundup of companies that had a rough week is Amazon Web Services for its system failure that disrupted websites and internet applications around the world.

Also making the list this week were Palo Alto Networks for its second-quarter sales shortfall, three leading server vendors that experienced double-digit fourth-quarter sales declines, Yahoo for more embarrassing disclosures about its massive security breaches, and a maker of internet-enabled toys whose database was hacked.

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.

Massive AWS Outage Wrecks Havoc On Web Service Providers

A four-hour service outage at Amazon Web Services S3 storage service Tuesday afternoon seriously disrupted websites, online applications and internet services around the world.

The problem originated with the S3 storage service in the Eastern U.S. region that owns roughly one-third of global cloud business. On Thursday AWS said the system failure resulted when an employee trying to debug a billing system entered a command incorrectly.

The outage affected a wide range of consumer and business services including Slack, Quora, Trello and a number of media sites such as BusinessInsider. USA Today quoted market research firm SimilarTech as saying the S3 system is used by 148,213 Internet sites.

AWS issued an apology for the system failure. The service outage was a black eye for AWS and once again raised questions about how much businesses should rely on public cloud services. Solution providers told CRN that the outage was a reminder that there are advantages to relying more on private cloud services backed by trusted advisers.

Palo Alto Networks Retools Sales Strategy After 'Disappointing' Q2 Results

Palo Alto Networks executives were on the hot seat this week when the company reported second-quarter sales that fell about $7 million short of Wall Street expectations. While revenue was up 26 percent year over year, even company executives described the results as "disappointing."

CEO Mark McLaughlin blamed the sales shortfall on "go-to-market execution issues" that stemmed from the company's sales strategy, including how sales territories are split and spending levels for sales and marketing.

While the company's sales playbook had successfully driven growth in the past, McLaughlin said Palo Alto Networks would recalibrate its sales strategy by reorganizing its account coverage model, retool sales and marketing resources, and update revenue expectations for the second half of the fiscal year.

HPE, IBM And Lenovo Suffer Big Q4 Server Sales Declines

Market researchers Gartner and IDC this week released their server sales stats for the fourth quarter of 2016 and the news wasn't pretty for Hewlett Packard Enterprise, IBM and Lenovo – all of which recorded double-digit declines in server sales and lower server market shares.

Market leader HPE's fourth-quarter server sales were down 11.0 percent, according to Gartner's calculations, while its market share dropped to 22.9 percent from 25.2 percent one year earlier. IDC put the vendor's fourth-quarter revenue decline at 12.2 percent while calculating that its market share slipped to 23.6 percent from 25.7 percent.

IBM's server revenue dropped 12.2 percent year over year, according to Gartner, while its market share declined to 11.7 percent from 13.0 percent. IDC calculated IBM's server revenue decline at a whopping 17.1 percent and said the vendor's market share dropped to 12.3 percent from 14.1 percent one year before.

Lenovo's fourth-quarter server sales were off 16.7 percent, Gartner reported, with its market share declining to 6.4 percent from 7.5 percent. IDC also put Lenovo's server revenue decline at 16.7 percent and calculated that its market share in the quarter was down to 6.5 percent from 7.4 percent one year earlier.

Both market research firms reported that Dell recorded server revenue and market share growth in the fourth quarter.

Yahoo Executives Failed To Fully Comprehend, Investigate 2014 Security Breach

The embarrassing disclosures about Yahoo's massive security breaches in 2013 and 2014, which compromised hundreds of millions of user accounts, just keep coming.

This week, in a 10-K filing with the U.S. Securities and Exchange Commission, Yahoo said that an independent committee of Yahoo's board of directors, assisted by independent counsel and a forensics expert, concluded that Yahoo's information security team had "contemporaneous knowledge" of the 2014 incident. By late 2014, according to the filing, senior executives and legal staff were aware of the attack, which the company has blamed on a state-sponsored entity.

But while the company implemented some additional security measures and notified 26 "specifically targeted users," according to the 10-K, "it appears certain senior executives did not properly comprehend or investigate, and therefore failed to act sufficiently upon" the information provided by Yahoo's security team. The 10-K also said Yahoo's legal team "did not sufficiently pursue" information about the 2014 incident.

The independent committee "found that failures in communication, management, inquiry and internal reporting contributed to the lack of proper comprehension and handling of the 2014 security incident," the 10-K stated.

Maker Of Internet-Connected Toys Hit By Database Security Attack

Sticking with the topic of embarrassing security hacks, the personal information of as many as a half-million owners of internet-connected stuffed animals may have been compromised.

Multiple news sites, including The Guardian and ThreatPost, are reporting that email addresses and passwords were stolen from a database used by the maker of CloudPets, stuffed animal toys that can play audio messages recorded by parents for the children.

The toys connect via Bluetooth to an internet application that parents use to upload recorded messages. Children also can record messages in response. Reports say the email addresses and passwords were recently stolen from an exposed database used by Spiral Toys, the maker of CloudPets. While several reports said that as many as 2 million recorded messages were also compromised in the security breach, the company has denied those reports.

Security experts are pointing to the incident as yet another example of the dangers posed by unsecured internet-connected devices.