Autodesk, a graphics-design firm, has recently come under scrutiny due to an internal investigation that led to the ouster of its chief financial officer. Starboard Value, an activist fund, has taken a sizable stake in Autodesk and has expressed serious concerns about the timing and disclosure of the investigation results.
Starboard Value has raised concerns over Autodesk’s disclosure of an internal investigation into misleading investors about the company’s free cash flow metrics and operating margins. The activist fund is particularly troubled by the manipulation of reporting tied to the company’s contract billing structure, which aimed to improve metrics by shifting payment structures.
Starboard Value is considering legal action in Delaware Chancery court to compel the reopening of Autodesk’s nominating window and delay the annual shareholder meeting. The activist group believes that Autodesk’s board intentionally withheld information from shareholders to limit their ability to nominate candidates in a contested fight.
Autodesk has faced activist scrutiny in the past, as evidenced by a settlement with two activist investors in 2016. The company has also disclosed ongoing probes by the Justice Department and SEC, adding to the growing list of concerns surrounding its financial practices.
Starboard Value sees potential for Autodesk to drive actual margin improvement and enhance investor communications to boost its stock performance. The activist fund has a track record of investing in technology companies and believes that Autodesk has room for improvement in these areas.
Overall, the situation at Autodesk highlights the importance of transparency and communication with shareholders. The company’s delayed disclosure of the internal investigation results has raised significant concerns among investors and activists alike. Moving forward, Autodesk will need to address these issues and work towards rebuilding trust with its stakeholders to ensure long-term success.