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Starboard Revives Proxy Fight with CEO Smith’s Nomination to Autodesk Board

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Starboard Value has renewed its proxy fight with Autodesk by nominating three director candidates, including its founder and CEO Jeff Smith, to the engineering and design software company’s board. The hedge fund, which holds a $500 million stake in Autodesk, aims to address concerns about the company’s margin growth and overall performance.

Nominations and Proxy Battle

In addition to Jeff Smith, Starboard has nominated Geoff Ribar, former CFO of Cadence Design Systems, and Christie Simons, a senior partner at Deloitte & Touche, to Autodesk’s 13-member board. Ribar also serves on the board of Acacia Research, a Starboard-backed company, while Simons recently joined Micron’s board.

The move comes nearly a year after a failed attempt by Starboard to push its own slate of director candidates. The hedge fund has criticized Autodesk for overspending compared to its software peers and for underperforming the market, pointing out that Autodesk’s shares have fallen over 7% this year, compared to a modest 1.8% drop in the S&P 500.

Autodesk’s Response and Future Plans

Autodesk has stated that its strategy is working and pointed to the addition of two independent board members in December 2024. The company expressed openness to meeting with Starboard’s nominees but raised concerns about the selection of candidates, questioning their alignment with Starboard’s opportunistic interests.

Starboard’s push for change is seen by some investors as a potential catalyst for increased cost management, enhanced accountability, and a greater focus on AI and cloud technologies, which could create value and improve Autodesk’s financial outlook.

Autodesk has already offered the hedge fund a chance to participate in the process that led to the appointment of the two new directors, including former Kraft Foods CEO John Cahill and Emerson’s COO Ram Krishnan.

Spotify Posts First Annual Profit and Projects Strong Quarter Ahead

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Spotify Technology reported its first-ever annual profit on Tuesday, attributing the success to a combination of strong user growth, price hikes, and strategic cost-cutting efforts. The Swedish audio streaming giant also provided a positive quarterly forecast, projecting earnings above Wall Street’s expectations, which drove its shares up nearly 10% in early trading.

The company’s profit marks the successful culmination of months-long efforts to improve profitability through cost reductions, including layoffs, reduced marketing spending, and scaling back investments in podcasting and audio. In the upcoming quarter, Spotify expects operating income of 548 million euros ($566.2 million), surpassing analysts’ forecasts of 450.6 million euros.

Spotify’s projected monthly active users (MAU) of 678 million for the quarter is close to the analysts’ estimate of 679.4 million, while its forecast of adding 2 million new premium subscribers, bringing the total to 265 million, exceeds expectations.

CEO Daniel Ek shared plans to introduce more personalized offerings for subscribers, including a new premium tier targeted at “superfans of music,” which will feature additional benefits to cater to different user preferences. Ek emphasized that Spotify’s future growth would involve creating various products tailored to specific audiences, rather than offering a one-size-fits-all option.

Spotify’s fourth-quarter results were bolstered by record user additions, with 35 million new subscribers, bringing the total to 675 million MAUs, surpassing estimates. Premium subscribers grew by 11% to 263 million, exceeding expectations of 260 million. The company also focused on boosting video and podcast content to increase user engagement, with a successful expansion of its music video feature and enhancements for content creators.

Revenue for the fourth quarter rose 16% to 4.24 billion euros, surpassing analysts’ estimates of 4.19 billion euros, driven by subscriber growth and a 5% increase in average revenue per user. The company’s gross profit soared 40%, thanks to a 16% drop in operating expenses, and its gross profit margin increased to 32.2% from the previous quarter’s 31.1%.

 

VW and Unions in Prolonged Talks to Seal Cost-Cut Deal Before Christmas

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Negotiations between Volkswagen management and labor representatives entered a second marathon day on Tuesday, with talks expected to extend late into the night, signaling significant differences over cost-cutting measures in Germany.

Protracted Negotiations and Strike Threats

After a 13-hour session on Monday failed to yield an agreement, unions remain steadfast in opposing management plans to cut wages, reduce capacity, and possibly shut down plants in Germany for the first time in Volkswagen’s history. If the two sides fail to reach a compromise, labor leaders have threatened to escalate strikes in January.

Around 100,000 workers have already staged two separate warning strikes over the past month, marking the largest labor action ever seen at the automaker. If talks collapse, union representatives at individual plants could vote for 24-hour strikes or even open-ended walkouts next year.

A union spokesperson reiterated that no decisions on further strikes would be made until negotiations conclude this week. The labor representatives insist any resolution must exclude plant closures, while Volkswagen management maintains that closures cannot be entirely ruled out given the company’s financial challenges.

Financial Pressures and Rising Competition

Volkswagen, Europe’s largest carmaker, is grappling with falling demand, rising operational costs, and increasing competition from low-cost Chinese rivals. These pressures have strained the historically cooperative relationship between Volkswagen’s Works Council Chief Daniela Cavallo and CEO Oliver Blume.

Workers Facing an Uncertain Holiday

Cavallo, speaking to union members before Monday’s talks, expressed the emotional toll on workers: “Workers don’t want to go into Christmas in fear.” The urgency to strike a deal before the holidays underscores the importance of avoiding prolonged uncertainty for Volkswagen’s workforce.

Both sides had anticipated these “last-ditch” discussions to stretch over several days, with hopes of achieving a resolution before Christmas. However, as the two sides remain far apart, the conflict threatens to drag into 2024 if an agreement is not reached.