Acacia Research Corp. has appointed two additional independent directors to its board, much to the consternation of one of its largest shareholders, which has pressed the Newport Beach-based company to replace its chairman and another board member.
The additions are Joe Davis, co-founder and chief executive of Los Angeles-based financial consultancy ETONIEN LLC, and Paul Falzone, managing partner of Manifest Investment Partners, which has offices in L.A., the Bay Area, Brooklyn and Boston.
Davis is up for election in 2019, Falzone in 2020.
New York-based hedge fund manager Sidus Investment Management LLC and BLR Partners LP in Houston, which own a combined 4.2% of outstanding Acacia shares, blasted the additions in a released statement, saying they “lack any record of public company board experience.”
Half of Acacia’s eight-member board, they argued, were hand-picked by incumbent directors and never faced elections.
The appointments followed a search process in the past year by Acacia’s board and overlooked two people Sidus and BLR nominated for Acacia’s upcoming annual shareholder meeting.
Acacia contends the nominees “were not made available on a timely basis” and that neither offered “experience or skills that would be additive to the Board.”
The activist investors contend the board first considered appointing Davis and Falzone two weeks after they made their nominations on March 20 and that their nominees were given only one day to meet with the Nominating and Governance Committee.
Sidus and BLR also requested to meet with the board.
“These actions are yet more evidence of the abysmal corporate governance practices at the company,” they said in a joint statement.
Sidus and BLR in a March 20 letter to Acacia shareholders laid out several issues with the firm’s governance and shifting business model since G. Louis Graziadio’s appointment as chairman, a period during which Acacia’s share price has lingered under $4, with a recent market cap of about $180 million—a far cry from its peak of over $1.9 billion in September 2011 around the time that patent licensing perhaps also peaked.
Acacia’s new model, which is focused on investing in emerging technologies, deviates from its core business of monetizing patents primarily through litigation, an increasingly costly and challenging endeavor due to recent changes in intellectual property law and jurisdiction limitations.
Acacia’s revenue declined 57.1% last year to $65.4 million. It posted net income of $22.1 million compared to a loss of $54 million in 2016. The gain was primarily tied to an investment in Costa Mesa-based Veritone Inc., which more than offset an operating loss of $27.2 million.
Another New Name
Broadcom has officially moved its corporate headquarters from Singapore to Delaware and changed its name again. It’s now Broadcom Inc.
The redomiciliation has been in the works for months and was approved by Broadcom’s board and confirmed by the Singapore High Court.
The chipmaker will continue trading under the symbol AVGO on the Nasdaq, where it had a recent market cap of about $101 billion. The company had been known as Broadcom Ltd. since early 2016, after Singapore-based Avago Technologies Inc. acquired the Irvine chipmaker for $37 billion.
Broadcom’s operational headquarters will remain in San Jose, where Chief Executive Hock Tan spends most of his time.
The company made headlines in November when Tan announced the corporate shift at a press conference with President Donald Trump, also lauding the tax reform plan. A few days later, Broadcom announced a $103 billion unsolicited bid for San Diego rival Qualcomm Inc.
The hostile bid was raised to $117 billion, but Trump killed the deal in a presidential order on March 12, citing national security concerns related to 5G development.
The Trump administration expressed concerns that if Qualcomm was acquired, Broadcom would invoke deep R&D cuts, including in 5G. If that happened, it contended, the U.S. would lose the lead to China in the race for 5G supremacy, and in doing so compromise national security.
Sales Got Game
Sales of video game hardware, software and accessories hit $995 million in February, up 23% year-over-year, according to Port Washington, N.Y.-based NPD Group Inc.
Hardware sales increased 79% to $594 million; accessories posted a 36% jump to $583 million; and software was up 24% to $916 million.
The trend bodes well for several OC companies in the sector, including Blizzard Entertainment Inc., Kingston Technology Inc. and Razer Inc.
Year-to-date spending on those gaming segments is up 39% to $2.1 billion.
