Tech firms that struggled in 2011

Tech firms that struggled in 2011

Summary: Yahoo, Research In Motion, Nokia and AMD plagued with negative performances and headlines all year. ZDNet Asia retraces key missteps and management upheavals that weakened their cause.

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TOPICS: CXO, IT Employment
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The year of 2011 cannot end soon enough for tech companies such as mobile handset makers Research In Motion (RIM) and Nokia, Internet company Yahoo and chipmaker Advanced Micro Devices (AMD).

These industry stalwarts grappled with management upheavals, business strategy shifts and confidence-sapping poor performances all year long, resulting in several negative headlines.

Yahoo in limbo
Yahoo, for one, started the year on the wrong foot when it announced on Jan. 25 that it laid off 100 to 150 employees, or 1 percent of its global workforce.

Things did not get better for the Web giant as it mishandled the Alipay spinoff in May by first announcing that it had lost control of that asset and, later, revealing that it knew about the spinoff in March but did not disclose the fact. Payments provider Alipay was part of the Alibaba Group, in which Yahoo currently has a 40 percent stake.

The series of events caused a dip in investor confidence and the company's shares plummeted.

Talk began circulating in June that Yahoo was looking to replace then-CEO Carol Bartz started. The rumor mills continued until the inevitable happened: Bartz was fired from her position on Sep. 6 and replaced by CFO Tim Morse as interim CEO.

In a note to Yahoo employees about her ousting, Bartz wrote: "I am very sad to tell you that I've just been fired over the phone by Yahoo's chairman of the board. It has been my pleasure to work with all of you and I wish you only the best going forward."

While the company met its third-quarter earnings target, Morse chose not to shed more light on the company's strategic review in October and remained tight-lipped about the search for its next CEO.

Amid the uncertainty, several companies including Alibaba and Microsoft and private equity firms such as Silver Lake Partners and TPG Capital expressed interest in either acquiring the entire company or parts of it.

There were also talks this month that Yahoo's board directors were considering selling back its Asian assets--Alibaba Group and Yahoo Japan-- to their majority holders in a tax-free deal worth US$17 billion.

Strategy shift jumpstarts Nokia's fortunes
The appointment of Stephen Elop as handset maker Nokia's first non-Finnish CEO in September 2010 heralded a series of milestones, none more significant than the decision early this year to dump its Symbian and MeeGo operating systems (OSes) in favor of Redmond's Windows Phone platform.

On Feb. 11, both companies announced a broad mobile phone partnership that saw Nokia adopting Windows Phone on its handsets and collaboration to build a "third ecosystem" to better compete with rivals Apple and Google with its Android platform.

"There are other mobile ecosystems. We will disrupt them," said Elop and Redmond CEO Steve Ballmer in a joint letter then. "There will be challenges. We will overcome them. Success requires speed. We will be swift."

In April, reality of this strategy shift set in as Nokia transferred 3,000 Symbian employees to consulting firm, Accenture, and announced it would cut another 4,000 by end-2012, with most of the cuts in Denmark, Finland and the United Kingdom.

The handset maker further streamlined its operations when it revealed in September it would slashed another 3,500 jobs in Germany, Romania and the United States by end of 2012, on top of the 4,000 announced in April.

There appears to be light at the end of Nokia's tumultuous 2011, though.

In October, the Finnish company revealed its first Windows Phone-based line, named Lumia, which Elop said represented the beginning of a new era for the company.

The devices were released to European markets including France, Germany, Italy, Netherlands, Spain and the U.K. in November, and arrived on Dec. 10 in Asia via Singapore, Taiwan and Hong Kong .

Rachel Lashford, managing director of mobile and Asia-Pacific at Canalys, described the arrival of the Lumia 800 and Lumia 710, which runs on the latest Windows Phone 7.5 OS, in key markets for the holiday season as "hugely reassuring".

Ageing OS, low confidence plagues RIM
Nokia's Canadian rival, Research In Motion, also struggled to keep up with industry pacesetters Apple and Google this year, as co-CEOs Mike Lazaridis and Jim Balsillie had to fend off doubts over its ageing BlackBerry OS, a worldwide service outage, plummeting stock prices and the company's leadership structure.

With regard to bringing to market a modern, sophisticated operating system to compete with the latest iOS and Android iterations, RIM had been slow in integrating its QNX software--which powers its PlayBook tablet--to the existing BlackBerry OS, only announcing its BBX software in October. Even then, it ran straight into copyright issues over the software's naming rights, and eventually settled on "BlackBerry 10" to avoid a lawsuit.

The company's credibility was also hit by a worldwide service outage that occurred on Oct. 10, resulting in users in Europe, Middle East and Africa not being able to access their e-mail, the Internet and instant messaging, among other services. The disruptions caused by a core switch failure within RIM's infrastructure later extended to South America, affecting over 10 million customers.

Frost & Sullivan analyst Craig Cartier said then that the timing of the disruption did not work in the Canadian handset maker's favor. With Apple and Android smartphones already cutting into RIM's market share, the company could ill-afford questions to its service reliability, Cartier noted.

The service outage, together with the decision to slash the PlayBook price, prompted the company to issue a statement on Dec. 2 that it would not meet its full-year financial targets.

Poor sales of the PlayBook had resulted in a US$485 million before-tax writedown related to the inventory valuation of the device, with a September report revealing that RIM was sitting on an approximate 800,000 device units in backlog.

Its third quarter earnings report on Dec. 16 confirmed its earlier assessment, showing declining profits and revenue, which caused industry watchers to question whether the enterprise smartphone maker would be able to rally in a brutally competitive environment.

The company also has no plans plan to release its next-generation smartphones running BlackBerry 10 OS until the latter part of 2012, thus, creating a huge void without any products that can compete with the market leaders.

A Sanford Bernstein analyst, Pierre Ferragu, commented: "The window of opportunity for RIM to fix its product portfolio is most likely gone."

AMD in transition
The U.S. chipmaker stepped into 2011 with uncertainty, too, after then-CEO Dirk Meyer agreed to step down from his position on Jan. 11--although it appeared the choice was not entirely his. The board of directors, in announcing the decision, stated: "We believe a change in leadership at this time will accelerate the company's ability to accomplish these objectives."

The Wall Street Journal reported the board decided, after a November 2010 company review, that Meyer was not doing enough to get the company into markets for newer mobile devices and opted look for someone else to lead the charge.

It took the Texas-based chipmaker another eight months before it selected a new CEO and president in Rory Read, formerly Lenovo's U.S. head of operations, in August.

Charged with leading the company into "dynamic new market while server space. Recent restructuring could impact share in discrete graphics with Nvidia as a potential beneficiary", he added.

Topics: CXO, IT Employment

Kevin Kwang

About Kevin Kwang

A Singapore-based freelance IT writer, Kevin made the move from custom publishing focusing on travel and lifestyle to the ever-changing, jargon-filled world of IT and biz tech reporting, and considered this somewhat a leap of faith. Since then, he has covered a myriad of beats including security, mobile communications, and cloud computing.

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