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Channel Conflict, Controversy: Windstream Bankruptcy, Mitel Rumors, RingCentral Trash Talk

Surprised Businessman

Forget Game of Thrones. if you’re looking for high drama, look no further than the world of telecommunications and information technology — particularly in one of its important subsets, the channel.

Among the expected news of the day, such as new hires, breaking M&A and changes in channel strategy, there also are controversies that get the channel talking. There have been quite a few since our last channel controversies gallery ran last August.

Recent hubbub involves Windstream heading to chapter 11 bankruptcy, CenturyLink’s stock woes and employees either losing their jobs or finding out their positions will be eliminated in the coming months.

Massive data breaches, sudden executive departures and efforts to stop the Sprint/T-Mobile merger also created buzz.

Click through the slides below to revisit the controversies and conflicts that have rocked the channel over the past several months.

Windstream chapter 11
Windstream Bankruptcy

After losing its court battle against Aurelius Capital Management, the writing was on the wall for Windstream.

Just days after the U.S. District Court of the Southern District of New York ruled that Aurelius is entitled to a judgment of more than $310 million, plus interest after July 23, 2018, Windstream filed for chapter 11 bankruptcy protection. The company has about $5.8 billion in outstanding bonds and loans.

Soon after, the communications giant's stock was delisted from Nasdaq. And last week, it reported a $549 million loss, and a more than $100 million drop in revenue and sales for the fourth quarter of 2018 compared to the same quarter in 2017.
2019 layoffs
New Year, New Layoffs

Just days into the new year, AT&T reportedly was gearing up for more layoffs after the Communications Workers of America (CWA) criticized the telco for cutting more than 10,000 jobs last year.

AT&T leadership planned what it’s calling a “geographic rationalization” and employment “surplus” reduction to consolidate some aspects of the carrier's operations in 10 major operational hubs, according to a Motherboard report. The states targeted for layoffs include New York, California, Texas, New Jersey, Washington state, Colorado, Georgia, Illinois, Missouri, and Washington, D.C.

IBM, Verizon, McAfee, VMware and Rackspace joined AT&T in confirming layoffs this year.
CenturyLink stock plummets
CenturyLink Stock Freefall

Early this month, CenturyLink‘s stock plummeted past a 20-year low after it reported it was unable to meet the deadline for filing its 10-K with the Securities and Exchange Commission (SEC). CenturyLink asked the SEC to extend the deadline for filing its 2018 annual report, which was due March 1. Edward Jones downgraded CenturyLink‘s stock to “sell” after the delay.

The telecommunications giant posted weaker-than-expected fourth quarter earnings last month, while cutting its dividend by more than one-half to just $1 per share, as it moves to cut its overall debt load from approximately $35.4 billion, according to TheStreet. The filing delay resulted from CenturyLink’s acquisition of Level 3 Communications in 2017.
Symantec shakeup
Symantec Leadership Shake-Up

In late November, 
Symantec‘s president and COO unexpectedly resigned amid sudden changes in the cybersecurity giant’s leadership structure within enterprise security. Michael Fey, who joined Symantec upon closing of its Blue Coat acquisition two years ago, resigned as president and COO. He is credited with successfully leading enterprise security product and field integration.
Massive breaches
Massive Breaches Rock Businesses, But Provide Channel Opportunity

Breaches have been escalating in terms of the amount of data exposed. Last fall, Facebook confirmed an attack on its computer network had exposed the personal information of nearly 50 million users. The attackers exploited a vulnerability in Facebook’s code that impacted a feature that lets people see what their own profile looks like to someone else. This allowed them to steal Facebook access tokens, which they could then use to take over people’s accounts.

In November, Marriott confirmed the personal information of up to 500 million guests may have been stolen after its reservations database was hacked. It later said that number was closer to 383 million individual guests because multiple records appear to be for the same guest.

And in January, with nearly 773 million unique emails and more than 21 million unique passwords exposed, “Collection #1″ was the largest public data breach by volume. It was discovered and reported by security researcher Tory Hunt, who maintains I have Been Pwned.
Datto CEO
Datto CEO Shocks Channel with Resignation

In October, Austin McChord, who founded backup and discovery disaster recovery provider Datto 11 years ago in his parents’ basement, unexpectedly announced he was leaving his position as CEO. He grew Datto into a company that sold in 2017 for more than $1.5 billion.

“The decision I made was a very personal one,” he told Democrat & Chronicle news. “I’ve basically done Datto my entire life. It’s been a 24/7, 365 job. And a life that is just Datto is not a life well-lived.”

Partners and competitors alike expressed surprise and regret at the news.
T-Mobile/Sprint merger
CWA, Others Intensify Fight Against Sprint-T-Mobile Merger

Last October, the Communications Workers of America (CWA) and other advocacy groups doubled down on their opposition to T-Mobile’s planned $26 billion acquisition of Sprint.

In addition to the CWA, Public Knowledge, Free Press and the Rural Wireless Association submitted comments with the Federal Communications Commission (FCC) in response to the two companies’ latest claims and assertions. Debbie Goldman, CWA’s research director and telecommunications policy director, said the merger would eliminate 30,000 jobs and raise prices for consumers, while still leaving rural communities without access to high-speed broadband.

On March 7, the FCC paused its 180-day informal time clock for consideration of the merger after T-Mobile and Sprint submitted filings that contain "substantial new material and reach conclusions about the effects of the transaction that were not previously in the record."
Kaspersky Lab fight
Kaspersky Lab Loses Challenge to U.S. Government Ban

In November, the D.C. Circuit Court of Appeals dismissed Kaspersky Lab‘s challenge to a federal district court’s decision upholding the Department of Homeland Security ban on using its products and an identical law signed by President Trump.

In a blog, Kapsersky Lab CEO Eugene Kaspersky acknowledged the dismissal and said he wanted to “send a personal message to our partners, stakeholders, friends, and supporters.”

“Will this latest decision stop us from fighting for a safer cyberspace for all?” he said. “Not a chance! The D.C. Circuit Court’s decision is disappointing, but the events of the past year that culminated in this decision were almost expected, and not just by our company, but by the cybersecurity industry in general. We’re sure that the issues involved in our litigation go far beyond technical aspects of U.S. constitutional law; they include real-world problems concerning everyone: a progression of protectionism and balkanization in a world of understated cyberrivalry and highly sophisticated international cyberthreats.”
California net neutrality
California Net Neutrality Law Sparks Legal Fight

Last September, California Gov. Jerry Brown signed SB 822 that restored net neutrality by imposing new regulations on internet service providers operating in the state. The Department of Justice (DOJ) then immediately announced its lawsuit against the state, saying the law unlawfully imposes burdens on the federal government’s deregulatory approach to the internet.

Jessica Ortega, SiteLock product marketing associate and member of its research team, said California’s new law is likely to face a “very heated court battle," potentially going all the way to the Supreme Court because the current federal administration and FCC leadership have been vocally opposed to this type of regulation.
Mitel fights rumors
Mitel Fights UC Rumors

Last fall, Mitel faced down rumors that it planned to abandon UC in its overall business strategy. At its Mitel Next conference, Todd Abbott, executive vice president of global sales and services, told attendees his company remains as committed to UC as it does UCaaS and contact center, as it pursues new business opportunities with its partners. The rumors began in the aftermath of Mitel's acquisition of ShoreTel.

"There’s just been a lot of speculation and it really stemmed out of the [ShoreTel] acquisition," said Mike Conlon, Mitel’s vice president of global channels. "When we went through the due-diligence process and the acquisition closed, there was a period of uncertainty from the ShoreTel channel. They weren’t quite sure where we were going to go as a company. They weren’t familiar with Mitel. Our channel-partner community between Mitel and ShoreTel [includes] very little overlap, less than 10 percent … so there was just a period of uncertainty; they weren’t quite sure. They had not seen a lot of innovation coming out of ShoreTel when it came to the onsite platform, which was the Connect platform, so I think they just got nervous. They just needed some level of reassurance over time."
RingCentral trashtalk
RingCentral Trash-Talks Competition

At last November's RingCentral ConnectCentral 2018 conference, founder, chairman and CEO Vlad Shmunis said Cisco, Avaya and Mitel are wasting their time trying to compete with his company because they can’t replace legacy systems with born-in-the-cloud solutions.

The world is ready to move away from on-premises and “folks like Cisco and Avaya are in decline,” he said. Cisco is a “fine company and obviously a world-class organization and well known in the communication space,” but their issue is their technology and the problems they’re trying to address are not of this century, but more like from the 1980s and 1990s when everyone sat behind a desk in the workplace,  he said.

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