Jeffrey Smith, CEO and chief investment officer at Starboard Value LP.
David Paul Morris | Bloomberg | Getty Images
Starboard Value, the activist fund run by Jeff Smith, has taken a large stake in graphics-design firm Autodesk and has spoken with the corporate’s board in recent weeks over plenty of serious concerns involving its disclosures around an internal investigation that led to the ouster of its chief financial officer.
Starboard’s stake is valued at roughly $500 million, in keeping with people aware of the matter. The activist, which has an extended track record of investing within the technology sector, is especially concerned concerning the timing of Autodesk’s disclosure of an internal investigation which revealed that executives misled investors around the corporate’s free money flow metrics and operating margins, said the people, who requested anonymity to debate confidential information freely.
The outcomes of that probe led to the ouster of Autodesk’s then-CFO, Deborah Clifford, who was moved to a special executive role inside Autodesk. The probe found that executives manipulated reporting tied to company’s contract billing structure, as Autodesk shifted back to upfront payments from annualized payments, to enhance those metrics.
Autodesk first disclosed in April that it had begun an internal investigation into disclosure issues around those metrics, almost a month after it had first begun the investigation and had informed the Securities and Exchange Commission that it was probing its financial reports. Autodesk shares slid 20% over the subsequent few weeks. The corporate’s market cap now sits barely below $50 billion.
The delayed disclosure got here somewhat greater than every week after the deadline to nominate directors closed. The tight window and timing of the disclosure has raised significant concerns inside Starboard, the people said, that Autodesk’s board deliberately selected not to tell shareholders ahead of its annual meeting. Such a delay would potentially limit a shareholder’s ability to nominate its own candidates in a contested fight.
Starboard is weighing legal motion in Delaware Chancery court to compel the reopening of Autodesk’s nominating window and the delay of Autodesk’s annual meeting, the people said. Autodesk’s shareholder meeting is currently scheduled for July 16.
The activist also believes that the corporate can drive actual margin improvement and improve investor communications to assist bolster Autodesk’s stock, the people said.
Starboard has built stakes in other major technology firms, including Marc Benioff’s Salesforce and Splunk, which was sold to Cisco in 2023 for $28 billion.
News of Starboard’s stake and plans was reported earlier by the Wall Street Journal.
Autodesk has faced activist scrutiny before. In 2016, it settled with two activist investors at Sachem Head Capital Management and Eminence Capital to stave off a proxy contest.
Autodesk disclosed earlier this 12 months that it’s facing Justice Department and SEC probes. A representative for the corporate didn’t immediately return a request for comment.
