Gartner Blog Network

Activist Investors

by Andrew Lerner  |  May 12, 2016  |  Submit a Comment

Fresh off news that an activist investor acquired a 7% stake in Infoblox, we are getting questions from Gartner clients about the ramifications of this.  Coincidentally, my colleague, Gary Spivak just published on the topic a few weeks back (and also guest-blogged on the topic back in 2015):

I&O Leaders Must Actively Respond When Key Vendors Face Activist Investor Pressures,

person takes money from another person, isolated on white

It is a tricky subject, and it isn’t unilaterally good or bad.  While every specific company situation is different, Gary notes in the research that Investor activism has impacted a number of notable public technology vendors in the past several years including BMC, Compuware, Riverbed, Juniper Networks, Citrix and EMC. Overall, the investors have been successful in generating positive returns on these efforts — for themselves. However, the activist investors frequently push for major changes, such as selling off divisions, selling the vendor, a narrowed focus on growing or profitable product lines and cutting expenses including head count. These changes often cause significant internal distractions that could impact product development, product support and morale within the vendor. I&O leaders must respond actively themselves.”

Why is this the case?  Simply put, the goals of the activist don’t always align with customers of the technology. As Gary describes: Investor activism frequently has ramifications across corporate strategy and internal morale, which result in turnover of key staff and an unclear roadmap for clients.

So what should you do (or not do)? In the research, Gary makes four specific recommendations, and here is a snippet of one of them:

Avoid lock-in or long-term commitment to vendors under the influence of an activist investor. I&O leaders must avoid long-term commitments to the vendor. While the future may be rosy and the vendor may emerge more focused and stronger, this outcome is not a foregone conclusion.

Regards, Andrew

Additional Resources

View Free, Relevant Gartner Research

Gartner's research helps you cut through the complexity and deliver the knowledge you need to make the right decisions quickly, and with confidence.

Read Free Gartner Research

Category: ddi  in-the-news  just-published  networking  

Tags: activist  infoblox  

Andrew Lerner
Research Vice President
6+ years at Gartner
21 years IT Industry

Andrew Lerner is a Vice President in Gartner Research. He covers enterprise networking, including data center, campus and WAN with a focus on emerging technologies (SDN, SD-WAN, and Intent-based networking). Read Full Bio

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes, with attribution to Gartner. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.