Frustrated with United Online Inc.’s stagnant stock price, a group of activist investors led by former Activision chairman Howard Marks are campaigning to replace the company’s board of directors.
Before the next shareholders meeting in June 2016, the “Concerned Stockholders of United Online” said in a statement they also aim to block the current board from taking a number of actions, including implementing a poison pill, using cash for acquisitions and increasing the size of board member compensation. The activist shareholders group said it owns 4.8 percent of United Online.
United Online’s businesses include low-cost Internet services NetZero and Juno Online Services, social network StayFriends.com and loyalty marketing service Mypoints. The Woodland Hills company was formed in 2001 after the merger of NetZero and Juno.
The company’s share price has stagnated over the last five years, hovering around $10. Revenue at United Online has fallen from $258 million in 2012 to $217 million in 2014. The company projects between $149 million and $154 million in revenue this year.
On Tuesday, United Online Chief Executive Francis Lobo, who was appointed to turn around the struggling company two years ago, also announced he was resigning from his position effective Nov. 18.
“What United Online lacks is a board that can motivate management to fully maximize value for stockholders,” the activist shareholders group said in a statement. “We believe that United Online stockholders deserve the opportunity to vote in new directors.”
Despite having a number of steady business units, such as NetZero and Mypoints, United Online has been slow to pursue new, higher-growth industries. Recently, the company has focused on divesting itself of businesses; selling off Classmates.com for $30 million in August and on Tuesday announcing plans to sell StayFriends.
United Online has said it plans to reinvest its cash in existing businesses and possibly acquire others. However, with no debt and $99.7 million in cash and cash equivalents, United Online itself may be a target for an acquisition.
“I think it’s pretty obvious the stock is ripe for the picking for activism,” said Daniel Kurnos, an analyst with Benchmark Company of New York.
United Online, said Kurnos, has “an awful lot of cash,” which is prompting shareholders to say, “‘Let’s do something with this or break this up because we don’t want to see a destruction of shareholder wealth.’”
Howard Marks declined to comment. A representative for United Online could not be reached for comment.
Technology reporter Garrett Reim can be reached at [email protected]. Follow him on Twitter @garrettreim for the latest in L.A. tech news.
