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 acquired a large stake in the graphic design company. Autodesk In recent weeks, the company has been discussing with its board of directors a number of serious concerns regarding disclosures made about the internal investigation that led to the firing 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 track record of investing in technology, is particularly concerned about the timing of Autodesk’s internal investigation revealing that executives misled investors about the company’s free cash-flow metrics and operating margins, said the people, who asked not to be identified discussing confidential information freely.
As a result of the investigation, Autodesk’s then-Chief Financial Officer Deborah Clifford was fired and reassigned to another leadership role within the company. The investigation found that executives had manipulated reporting related to the company’s contract billing structure to improve those metrics when Autodesk moved from annual to prepaid billing.
Autodesk first announced in April that it had launched an internal investigation into disclosure issues around these metrics, nearly a month after it launched its investigation and notified the Securities and Exchange Commission that it was looking into its financial reports. Autodesk’s shares fell 20% in the weeks since. The company’s market capitalization is now just under $50 billion.
The delay in the disclosure came just over a week after the deadline for director nominations expired. The short disclosure period and early timing raised concerns within Starboard that Autodesk’s board may have deliberately chosen not to notify shareholders before the annual meeting, according to people familiar with the matter. Such a delay could limit shareholders’ ability to nominate their own candidates in a competitive bidding war.
Starboard is considering filing suit in Delaware Chancery Court to force Autodesk to reopen its nomination period and postpone Autodesk’s annual meeting, which is currently scheduled for July 16, according to people familiar with the matter.
The activist also believes Autodesk can drive real margin improvement and improve communication with investors, which could boost the company’s stock price, according to the people.
Starboard also has stakes in other big tech companies, including Marc Benioff’s Salesforce and Splunk, which was sold to Cisco for $28 billion in 2023.
News of Starboard’s stake and plans was earlier reported by The Wall Street Journal.
Autodesk has faced scrutiny from activists before. In 2016, Settlement with two activist investors He fended off a proxy fight with Sachem Head Capital Management and Eminence Capital.
Autodesk said earlier this year that it was under investigation by the Department of Justice and the Securities and Exchange Commission. Representatives for the company did not immediately respond to a request for comment.
