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5 Companies That Had A Rough Week

For the week ending Feb. 8, CRN looks at IT companies that were unfortunate, unsuccessful or just didn't make good decisions.

Week Of Feb. 8

Topping this week's roundup of those having a rough week is DXC Technologies, which in addition to reporting a rough quarter, had to deal with a federal lawsuit brought by a former employee who accuses CEO Mike Lawrie of holding back severance payments by changing the date his stock options vested.

DXC said the suit has “no merit.”

Down the hall from that lawsuit, Sprint has sued AT&T in U.S. District Court over the carrier’s 5G claims. The suit cites the 1946 Lanham Act, which guards trademarks and protects against unfair business practices.

Meanwhile, Palo Alto Networks partners are hitting “pause” on their relationship with the company after it relegated them to a referral fee model that limits margins they can make on RedLock products.

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DXC Technologies

Former DXC executive vice president Stephen Hilton (pictured), who was once seen as a possible successor to CEO Mike Lawrie, filed a $14.3 million breach of contract lawsuit in U.S. District Court that alleges Lawrie ordered changes to the vesting dates on his stock options “without contractual or other legal authority.”

“Upon his termination, Hilton was not paid what CSC and DXC promised,” the suit states. “Hilton was paid none of the benefits promised under his severance agreement, and all of his outstanding restricted stock units and stock options were cancelled. The way in which some of his stock grants were cancelled offers clear proof that Lawrie and DXC were acting in bad faith in their termination of Hilton.”

Q3 earnings were also released this week that showed revenue was down 5.3 percent at the integrator, which is on pace to hit annual earnings of $20 billion in revenue this year, about $4 billion less than last year.

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Palo Alto Networks

Palo Alto Networks is launching a new Saas Deal Referral channel program that some partners see as a major shift in channel strategy that has them up in arms.

Under the new program, Palo Alto Networks plans to pay partners with a 10 percent referral reward for uncovering sales opportunities for its RedLock cloud threat defense offering for Amazon Web Services, Microsoft Azure and Google Cloud.

"We're going to hit the pause button [on Palo Alto Networks] really hard," said one solution provider executive who asked not to be identified. "This is bizarrely outside their past channel strategy, and I think it's a massive threat to their channel credibility as well as their program."

Partners told CRN that the RedLock program for the first time relegates partners to a referral fee model that they say limits the margin they can make on the RedLock product sale. What's more, partner said, they expect the SaaS Deal Referral program to move to other products besides RedLock, which the company acquired in October for $173 million as part of its stepped-up cloud security offensive.

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Apple

Apple was forced to update software for its popular FaceTime this week, weeks after a user discovered a bug in the app that allowed people to use Group FaceTime to eavesdrop on people through their devices. Fallout includes a lawsuit from a Texas lawyer who said an unknown person was able to listen to a conversation with a client, as well as calls from members of Congress who want to know why it took Apple so long to respond and fix the bug, according to USA Today.

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Microsoft Exchange

An “elevated privilege flaw” inside Microsoft Exchange could allow a remote attacker to impersonate an administrator, security news website Threatpost reported. Using the flaw, a bad actor could carry out a remote attack using a mailbox account to gain privileges, the site stated.

“The flaw exists due to a perfect storm of default settings in Microsoft Exchange Server and the mail server and calendaring server that run on Windows Server operating systems,” threatpost wrote. “According to Microsoft, Exchange 2013 and newer versions are impacted.”

The security gap, called “PrivExchange” has a “high severity” CVSS score of 8.3, the site reported.

As yet, Microsoft has not released a fix.

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Sprint Sues AT&T

In a federal lawsuit filed this week, Sprint accuses AT&T of false advertising, and violating the Lanham Act, which protects against unfair competition, after AT&T boasted of offering a 5G wireless network.

“By making the false claim that it is offering a 5G wireless network, where it offers only a 4G LTE Advanced network, AT&T is attempting to secure an unfair advantage in the saturated wireless market,” Sprint stated in its lawsuit filed in U.S. District Court for the Southern District of New York. “AT&T’s false and misleading statements deceive consumers into believing that AT&T now operates a 5G wireless network and, through this deception, AT&T seeks to induce consumers to purchase or renew AT&T’s services when they might otherwise have purchased Sprint’s services.”

The suit calls for the court to “permanently” enjoin and restrain AT&T from using 5GE or 5G Evolution until the company can verify it is complying with “3G 3PP 5G Standards,” and asks for damages to be awarded at trial.

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