1. Activist Investor Starboard Calls for 'Substantial Change' at Israel's Mellanox

    Activist Investor Starboard Calls for 'Substantial Change' at Israel's Mellanox

    In a letter to Israel’s Mellanox Technologies Ltd., activist investor Starboard Value LP, which is the company’s largest shareholder, attributed the firm’s underperformance compared to other semiconductor companies to “weak execution,” “excessive spending” and “missed growth opportunities.” Starboard, a New York-based investment adviser that invests in publicly traded US companies, in November acquired a 10.7 percent stake in the Israeli maker of servers and storage switching solutions, in a bid to turn around its fortunes. “We invested in Mellanox because we believe the company is deeply undervalued and there are significant opportunities to create value based ...

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    1. We invested in Mellanox because we believe the company is deeply undervalued and there are significant opportunities to create value based on actions within the control of management and the Board.
    2. This consistent underperformance is troubling and puzzling, given both the strong performance of Mellanox's peers and the tailwinds provided by the Company's favorable exposure to many of the most attractive end markets in the industry: high-performance computing, cloud computing, hyperscale data centers, and artificial intelligence.
    3. Even more concerning, this pattern of missing expectations has come during a time when almost every other semiconductor company has repeatedly beaten expectations and raised guidance.
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