Investor: Change, SeaChange


One of SeaChange International’s largest shareholders, investment-advisory
firm Ramius, sent a letter last week to the company’s board of directors expressing “disappointment
and concern regarding the poor margin performance” in the core software business
and called on the board to re-evaluate the decision to not sell the Servers and Storage business.

Ramius owns about 8.9% of SeaChange’s outstanding shares.

“For too long, senior management has failed to achieve its stated fi nancial targets,” Ramius managing
director Peter Feld said in a statement. “It is [the
board’s] responsibility to ensure that senior management
either makes good on its commitments to shareholders
or is held accountable for its failures.”

In a statement, SeaChange chairman and CEO Bill
Styslinger said, “The board of directors welcomes open
dialogue and feedback from our shareholders and will
carefully consider the matters raised by Ramius.”

Ramius recommended the board re-examine
SeaChange’s decision to turn down several offers for
its Servers and Storage group. The investment firm estimated
the unit posted a pre-tax loss of $12 million
over the last 12-month period.

Meanwhile, SeaChange’s Software segment operating
margins were approximately 3% in the first quarter
this year and less than 2% in the second quarter,
whereas company management had been targeting
10% operating margin for the full 2011 fiscal year.

“Without substantial and immediate cost reductions,
it appears the company will fall short of achieving
its publicly-stated margin targets for the full year
fiscal 2011,” Feld said in the letter.

Ramius also called on the board to separate chairman
and CEO roles, “an action … we believe would
ensure the true independence of the board.”