5 Companies That Had A Rough Week
The Week Ending May 11
Topping this week's roundup of those having a rough week is Symantec, which disclosed this week that it launched a probe around concerns raised by a former employee – an announcement that sent its stock price plunging.
Also making the list this week are Xerox for the ongoing battle between the Xerox board and major shareholders for control of the company's future; Microsoft's plan to replace Surface Pro 4 devices with annoying flickering screens; ZTE, which has shut down operations because of a U.S. government ban on doing business with the Chinese telecommunications gear maker; and AT&T for hiring Trump's personal lawyer to provide consulting services.
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.
Symantec Launches Probe Around Concerns Raised By Ex-Employee, Company's Stock Plunges
Security software developer Symantec has retained independent council and other advisors to help investigate concerns raised by a former employee, the company disclosed this week.
Company executives said Thursday that the Audit Committee of its Board of Directors is conducting the probe, but declined to say much more. The company did say the investigation was not tied to any security concern or breach around Symantec's products or systems.
The company took the highly unusual step of not allowing financial analysts to ask questions during the company's earnings call Thursday and limited the session to prepared remarks. Executives said the company's financial results could change as a result of the probe and added that it's unlikely the probe would be completed in time for the company to file its 10-K annual report for the fiscal year ended March 31, 2018, in a timely manner.
Symantec's stock plunged more than 20 percent in after-hours trading following the announcement. (As of mid-day Friday the stock price had fallen further and was down more than 32 percent from its Thursday close.)
The Battle Over Xerox's Future Goes On In Dueling Letters
Xerox's executive suite has been in turmoil for several weeks now as major shareholders, led by activist Carl Icahn, continue their efforts to control the company's direction and maintained their opposition to merge Xerox with Fujifilm.
The wrangling continued this week in a battle for the hearts and minds of Xerox investors. On Wednesday the Xerox board issued a letter to shareholders in what it described as a move to set the "record straight" and said it is acting in the best interests of the company and its investors. The board said it would continue to explore options for Xerox's future, including a possible deal with Fujifilm.
"Your Board remains fully committed to doing everything we can to maximize shareholder value and acting in the best interests of all Xerox shareholders," the letter stated.
Icahn responded with his own letter one day later, calling the board's letter "misleading" and saying it "grossly misrepresents the facts about their conduct over the past year."
"The Xerox Board is delusional," Ichan wrote in his letter. "If you listen to them, the court is wrong, the company’s largest shareholders are wrong, the analysts are wrong and the corporate governance experts are wrong. Only they – in their infinite, benevolent wisdom – know what’s best for us and our company."
Microsoft Launches Surface Pro 4 Replacement Program Due To "Screen Flicker"
Microsoft said this week it would replace eligible Surface Pro 4 tablets that are experiencing bothersome flickering displays.
Microsoft acknowledged that "a small percentage of Surface Pro 4 devices are exhibiting a screen flicker that cannot be addressed with a firmware or driver update," according to a web page set up for the replacement program.
The Surface Pro 4 is the previous generation of Microsoft's tablet lineup, initially released in late 2015. The current generation of the product came out last year.
Microsoft said it would replace "eligible" Surface Pro 4 tablets for free at any time within three years of the device's purchase date.
China's ZTE Shuts Down Operations, Blames U.S. Ban
Chinese telecommunications equipment and smartphone maker ZTE Corp. has suspended all major operations, including manufacturing and sales, according to reports from Reuters, Bloomberg and other media.
Last month the U.S. government prohibited U.S. firms from supplying it with components and technology after the company was found to have allegedly violated U.S. export restrictions by illegally shipping goods to Iran, according to the Reuters story.
The reports said ZTE was communicating with the U.S. Commerce Department in an attempt to get the ban modified or lifted.
AT&T Admits Hiring Trump Lawyer Was A Big Mistake
AT&T CEO Randall Stephenson (pictured) issued a memo to the telecommunications giant's employees Friday acknowledging that hiring President Donald Trump's personal lawyer Michael D. Cohen was a "big mistake."
News emerged this week that AT&T had hired Cohen – and paid him $600,000 – to advise the company on its efforts to buy Time Warner for $85.4 billion, a deal the U.S. Department of Justice has opposed.
"Our company has been in the headlines for all the wrong reasons these last few days and our reputation has been damaged," Mr. Stephenson wrote in the memo to employees, according to a New York Times story. "There is no other way to say it -- AT&T hiring Michael Cohen as a political consultant was a big mistake."
Federal prosecutors are investigating Cohen's business dealings, the story noted, including a $130,000 payment made to adult film actress Stephanie Clifford, also know as Stormy Daniels – reportedly to cover up an affair she had with Trump.
While Stephenson said AT&T's actions were legal and "entirely legitimate," he said hiring Cohen "was a serious misjudgment," according to the Times story. Stephenson also said that Bob Quinn, AT&T's head of lobbying and external affairs, would retire.