Jeffrey Smith, CEO and Chief Investment Officer of Starboard Value LP.
David Paul Morris | Bloomberg | Getty Images
Starboard Value, an activist fund run by Jeff Smith, has acquired a significant stake in the graphic design firm. Autodesk In recent weeks, he has spoken with the company’s board of directors about a number of serious issues related to the disclosure of information about the internal investigation that led to the resignation of its chief financial officer.
Starboard’s stake is valued at about $500 million, according to people familiar with the matter. The activist, who has a long history of investing in the technology sector, is particularly concerned about Autodesk’s disclosure of an internal investigation that found management misled investors about the company’s free cash flow and operating margins, the people said. who requested anonymity in order to freely discuss sensitive information.
The results of this investigation led to the dismissal of Autodesk’s then-CFO Deborah Clifford, who was reassigned to another executive position within Autodesk. The investigation found that executives manipulated reporting related to the company’s contract billing structure as Autodesk reverted to upfront payments on annual payments to improve those metrics.
Autodesk first announced in April that it had launched an internal investigation into problems with the disclosure of these figures, nearly a month after it first launched an investigation and informed the Securities and Exchange Commission that it was reviewing its financial statements. Autodesk shares fell 20% over the next few weeks. The company’s market capitalization is now just under $50 billion.
The delay in disclosure comes just over a week after the deadline for the appointment of directors closed. The tight timeline and timing of the disclosures raised significant concerns within Starboard, with Autodesk’s board deliberately choosing not to update shareholders ahead of its annual meeting, the people said. Such a delay would potentially limit a shareholder’s ability to nominate its own candidates in competition.
Starboard is considering legal action in Delaware Chancery Court to get Autodesk’s nomination process reopened and Autodesk’s annual meeting rescheduled, sources said. Autodesk’s shareholder meeting is currently scheduled for July 16th.
The activist also believes the company can actually improve earnings and improve investor relations to support Autodesk stock, the people said.
Starboard has acquired stakes in other major tech companies, 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 previously reported in the Wall Street Journal.
Autodesk has faced scrutiny from activists before. In 2016 this is settlement with two activist investors at Sachem Head Capital Management and Eminence Capital to prevent proxy competition.
Earlier this year, Autodesk said it was facing an investigation by the Justice Department and the U.S. Securities and Exchange Commission. A company representative did not immediately respond to a request for comment.