A minority investor in Seachange has blasted the TV technology provider’s business decisions and called for a board reshuffle and ultimately a sale, in an open letter to the company.
Roumell Asset Management, which owns an approximate 3.3% stake in Seachange, said it is “critical that the company’s Board hear our views” in light of its past performance, and backed a strategy that will “ultimately position the company for a successful sale”.
“Over the past several years, we’ve witnessed the company’s poor operating results and weakening balance sheet, which in no small part resulted from decisions in which several current board members participated,” said Roumell Asset Management.
“The recent vote by shareholders to not re-elect long-time director Tom Olson should impress upon the board that shareholders are finished with the company’s ‘business as usual’ culture. The decisions of the past several years – dismal capital allocation, a disastrous acquisition, and continued operating losses – will no longer be accepted by shareholders.”
The letter urged “further reconstitution” of the Seachange board, and said that individuals who “participated in some of these glaringly inept decisions” should consider stepping down.
“It’s clear to any independent observer that new blood is needed in the boardroom. Legacy directors should cede their personal agendas to the strong will of the company’s shareholders and step aside,” said the letter.
Roumell praised current Seachange’s current CEO Ed Terino and his decision to streamline operations, exit the company’s Milpitas operation, and build a tech team in Poland, and said that the chief exec had the trust of shareholders.
“It should be obvious to the board that SeaChange’s small, sub-US$100 million revenue base is insufficient to warrant remaining an independent going-concern. We have talked to industry participants and believe the demand for SeaChange’s assets would provide shareholders a meaningful premium to the company’s current share price,” said the letter.
“We believe Mr. Terino’s approach of protecting the company’s balance sheet by reducing expenses, while focusing on discrete market opportunities, is the correct one and will ultimately position the company for a successful sale.”
SeaChange had not responded to a comment request at the time of going to press.
A spokesperson for Seachange said: “We have received Mr. Roumell’s letter, and have shared it with our board of directors. While we appreciate the input and perspectives of our shareholders, we find this type of communication distracting to our shared goals of enhancing the company’s operating performance and long-term value. We will continue to engage in active discussion with all our shareholders, including Mr. Roumell.”
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