IBM and EDS suffer potential setbacks; partners welcome new Symbol CEO.
It took Pete Rose 14 years to come clean and admit that he bet on baseball. Unlike Rose, IBM Corp. took a matter of months to uncover and admit its own wrongdoing.
Big Blue has fired three executives who were allegedly involved in a bribery scandal within IBM's Korea unit. The computing giant since November has been cooperating with Seoul investigators, who uncovered a bribery scandal that allowed IBM and several of its partners to win lucrative contracts with the Korean government.
Despite IBM's black eye, investors applauded Big Blue's aggressive investigation of the scandal. Shares in the company are trading near a 52-week high.
Deal 2 – Who Stole EDS's Cheese?: Electronic Data Systems Corp. and Lockheed Martin Corp. are playing an expensive game of cat and mouse. The result could be an $860 million setback for EDS. It seems that Lockheed is protesting a Housing and Urban Development (HUD) contract won by EDS last year. Congressional auditors are pushing for the government to overturn the contract because Lockheed had provided a lower bid on the project. Subcontractors on the deal include AT&T Corp., Dell Inc. and Unisys Corp.
Insiders say HUD is leaning toward re-bidding the contract. If so, HUD will likely benefit from this process: EDS knows it has to lower its bid or provide compelling evidence that its higher price tag delivers unmatched value-added services.
Deal 3 – Partners Applaud Symbol CEO: Partners have had a week to digest Symbol Technologies Inc.'s CEO change. While outgoing CEO Richard Bravman was highly respected, newly installed Bill Nuti is already winning rave reviews from integrators.
Bill Nuti talks strategy. To read the full story, click here.
Just ask Stratix Corp., a retail solutions provider that partners with Symbol to support point-of-sale systems at The Home Depot Inc. "We think the Nuti move is fabulous," says Bonney Shuman, CEO of Stratix. "He has demonstrated a repositioning of the company since joining Symbol and we are confident he will continue to push for positive change and growth!"
Nuti left Cisco Systems Inc. in mid-2002 to join Symbol as president. He immediately assumed internal day-to-day operations at the company, while Bravman investigated Symbol's accounting problems. Symbol says the problems, which include improper revenue recognition and so-called channel stuffing, have been rectified.
Stratix's vote of confidence in Nuti carries a lot of weight within the channel. The company has partnered with Symbol for more than 20 years.
Deal 4 – IT Fashion Consultant: Xybernaut Corp., maker of wearable computers, says year-over-year revenue at its services subsidiary grew 50 percent to $50 million in 2003. Bad news for Xybernaut partners? Not necessarily.
Many of Xybernaut's services deals involve resellers, integrators and other subcontractors. In December, for instance, Wheeldon Integration Inc. vowed to promote and sell Xybernaut's products to government and Fortune 1000 clients. Wheeldon specializes in security and mobility solutions. We'll let you know if Wheeldon and Xybernaut manage to win any joint deals.
About Contract Watch: Each week, this column examines customer engagements that are stirring the channel, and the solutions providers behind them. Our goal is to strip away the hype and tell you what's really selling—and what isn't—in today's IT marketplace. Send your tips to my e-mail address below.
Joseph C. Panettieri (joe_pan5@yahoo.com) has covered Silicon Valley since 1992. He is editorial director of the New York Institute of Technology .
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