In reaction to Compuware Corporation's CPWR poor preliminary Q4
fiscal year 2013 earnings, Sandell Asset Management's Chief Executive Officer
Thomas E. Sandell sent today the following letter to Compuware's CEO and Board
of Directors:
Robert C. Paul
Chief Executive Officer
Compuware Corporation
One Campus Martius
Detroit, MI 48226-5099
cc: Board of Directors
Dear Mr. Paul,
Through both public and private correspondence with you and the Board of
Directors over the past six months, we have identified our main concerns with
the management of Compuware – namely, the tendency to over-promise and
under-deliver, and poor execution. The Q4 fiscal year 2013 earnings
preannouncement on April 3^rd only further proves that our concerns are
justified.
You cited various reasons for the poor Q4 performance, including a weaker IT
spending environment, delayed purchasing decisions by European clients and
various "challenges and distractions". We suggest that the real reason for the
poor Q4 performance is management's inability to execute operationally. The
fact that you have disappointed the investment community, and all of your
stockholders, with weak fundamental performance in three of the last four
quarters convinces us that current management cannot be trusted to realize the
significant value we see in the company. We believe that the only viable path
to maximize stockholder value, rather than destroy it, is to execute a sale of
the company to the highest bidder as promptly as possible.
In our most recent private communication on March 25^th, we demanded that the
company conduct a full auction process, as opposed to only fielding incoming
requests. We reiterate this view. Further, we understand that you may have
rebuffed a serious bidder, based on your inflated view of the company's
standalone value. We do not share that view, if the company stands alone under
the stewardship of current management. Again, we urge you to conduct a full
and robust auction and consummate a sale at the best available price as soon
as possible.
Should you fail to promptly take steps to maximize stockholder value, which we
believe can best (if not only) be accomplished through a robust auction
process for sale of the company, we intend to pursue a change to the Board
composition at the next annual meeting.
Sincerely,
Thomas E. Sandell
Chief Executive Officer
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