5 Companies That Had A Rough Week
The Week Ending Nov. 16
Topping this week's roundup of those having a rough week is Oracle, whose bid to oppose the award of the gigantic JEDI cloud contract by the Pentagon to a single vendor was rejected this week.
Also making the list this week are Facebook for increased scrutiny for its business practices, Black Box Network Services for its inability to overcome its huge debt and survive as an independent company, Comcast for possible increased scrutiny by the U.S. Department of Justice, and Nvidia for a precipitous plunge in its stock price following a disappointing earnings report.
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.
Oracle's JEDI Cloud Contract Protest Shot Down By GAO
Oracle's efforts to halt the award of a massive cloud computing contract to a single vendor hit a major roadblock this week when the federal government watchdog that oversees procurement tossed out Oracle's protest over the pending deal.
The General Accounting Office said the Pentagon is within its right to seek a single vendor for its $10 billion cloud transformation initiative and that military leaders have not violated any procurement laws.
The GAO denied Oracle's arguments that a single award violates a statutory preference for multiple vendors, that the terms restrict competition by exceeding the military's actual needs, and that the Pentagon didn't consider potential conflicts of interest.
Facebook Suffers Service Outage, Faces Increased Scrutiny Over Its Business Practices
It was a rough week for social media giant Facebook on multiple fronts.
The week started badly when the company was hit with a service outage that took down its main website, along with its Workplace collaboration tool and Messenger application. The outage prompted complaints from several thousand users who were unable to access its main social media site and were greeted with the message: "Sorry, something went wrong. We're working on it and we'll get it fixed as soon as we can."
Facebook later blamed the outage on a "routine test," according to a USA Today story. Service was generally restored within an hour.
But the real hit came Wednesday when the New York Times published an explosive investigative story on Facebook that suggested the company had not been entirely forthcoming about Russia's use of the social media site for interfering in U.S. elections, and said the company had hired an opposition research firm to dig up dirt on competitors.
The story sent Facebook into PR crisis mode. CEO Mark Zuckerberg and other top executives denied knowing about the decision to hire Definers Public Affairs, a Washington D.C.-based firm, to dig up information on Facebook competitors and critics, and said they had cut ties with the company, according to a CNN Business story.
Facing Insurmountable Debts, Black Box Agrees To Be Acquired
Beleaguered solution provider Black Box Network Services, which has struggled financially in recent years, is giving up the battle to remain an independent company and will be acquired by a subsidiary of AGC Networks Ltd. for $16.4 million by the end of the year.
Black Box has wrestled with declining sales, mounting losses, high debt and multiple changes in leadership. The company has cut costs and sold off a number of its businesses, including its federal government IT services business, in an attempt to reduce its debt load. But in the efforts weren't enough.
This week CEO Joel Trammell praised the Lawrence, Pa.-based company's 3,000 employees for their effort and assured them they will still have jobs under the new owner.
"I believed there was significant value in our businesses, but it was clear we could not support the debt load that had been placed upon the company," Trammell said in a statement to employees. "I am proud of the work all of you have done to hold the business together these last several months under difficult circumstances. I believe this acquisition is the best outcome for all our major stakeholders: employees, customers and stockholders."
Comcast And NBC Universal Face Call For DOJ Antitrust Probe
Comcast and its NBC Universal division should face an antitrust investigation by the U.S. Department of Justice, according to a lobbying group representing 700 smaller video and broadband providers across the country.
The group, The American Cable Association (ACA), sent a letter to Assistant Attorney General Makan Delrahim saying that Comcast's acquisition of NBCU was more harmful that AT&T's $85 billion acquisition of Time Warner earlier this year.
Comcast can raise programming prices in local markets where Comcast is the dominant multichannel video programming distributor, the letter argued. The group also said that Comcast-NBCU has "demonstrated a willingness to harm rivals even while being subject to DOJ and [Federal Communications Commission] conditions."
Nvidia Shares Tumble After Disappointing Earnings, Q4 Outlook
Chipmaker Nvidia saw the value of its stock plummet this week after delivering disappointing third-quarter financial results on Thursday and a weak outlook for the current fourth quarter.
Nvidia shares lost nearly 19 percent of their value Friday, the company's worst single day in more than 10 years, closing at $164.43. Altogether the company's stock is down nearly 44 percent from its 52-week high of $292.76.