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Cognizant Increases Share Buyback Plan by $2 Billion Amid Economic Challenges

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Cognizant Technology (CTSH.O) announced on Tuesday that its board has approved a $2 billion increase to its existing share repurchase program, bringing the total authorized amount to $3.1 billion. The company now expects to repurchase $1.1 billion worth of shares this year, a $500 million increase over previous expectations.

This move comes as part of Cognizant’s ongoing efforts to enhance shareholder returns, despite facing challenges in the IT services market. Shares of the company rose 1.7% in early trading following the announcement. Cognizant is set to host its investor day later today, where it will unveil its long-term growth strategies, including plans to improve its artificial intelligence (AI) offerings.

The company has been grappling with fluctuating IT services demand due to economic uncertainty and high interest rates, which have put pressure on enterprise budgets and caused clients to reduce spending. This uncertainty led to Cognizant lowering its annual revenue forecast last month, falling short of analysts’ expectations.

In addition to these financial concerns, Cognizant is also dealing with activist investor involvement from Mantle Ridge, which has been in discussions with the company since mid-2024. The Wall Street Journal reported earlier this month that Mantle Ridge has acquired a stake worth more than $1 billion in Cognizant and has been privately engaging with the company to address its performance and share price growth.

Activist Investor Pressures Dropbox to End Founder-Controlled Structure

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Dropbox is facing significant pressure from activist investor Half Moon Capital to dismantle the company’s dual-class share structure, which grants CEO and co-founder Drew Houston a supermajority of voting power. The hedge fund has raised concerns about Dropbox’s slowing revenue growth and its strategy regarding payment tiers, according to a report by the Wall Street Journal.

Half Moon Capital, which holds around 40,000 shares in Dropbox, is advocating for the removal of the structure that currently gives Houston approximately 77% of the voting rights, thanks to his Class B shares, which carry ten times the voting power of Class A shares. The proposal to eliminate this structure is set for a vote at Dropbox’s annual meeting, with a majority vote required for approval, meaning Houston’s support would be crucial for its passage.

The activist investor has criticized the company for what it perceives as “significant missteps” and argues that the current voting arrangement prevents shareholders from holding management accountable. While Dropbox and Half Moon did not immediately respond to requests for comment, the outcome of the vote could significantly impact the company’s governance structure.

In recent months, Dropbox has faced challenges, including a 20% global workforce reduction announced in October 2024, following a 16% layoff in 2023. The situation has raised questions about the company’s strategic direction under Houston’s leadership.

Rapid7 Nears Settlement with Activist Investor Jana Partners

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Rapid7, a cybersecurity company, is nearing a settlement with activist investor Jana Partners following discussions about boosting the company’s share price and exploring strategic options, including a potential sale. Under the terms being discussed, three new members would be added to Rapid7’s eight-member board, sources familiar with the matter told Reuters.

An agreement could be finalized as early as Monday, though the situation remains fluid, according to the sources. Neither Rapid7 nor Jana Partners commented on the negotiations.

The Boston-based company, which specializes in vulnerability management, has faced challenges as its stock has dropped 41% over the past 52 weeks and 28% this year, bringing its market value down to approximately $1.8 billion. Jana Partners owns a 5.8% stake in Rapid7, according to a March regulatory filing.

In addition to the ongoing settlement talks, Rapid7 had previously attracted acquisition interest from buyout firms like Advent, Bain Capital, and EQT.