Elliott’s Broad Influence in Tech Market Includes EMC, Polycom, Others

With Dell buying EMC and reports of Polycom-Mitel merger talks, Elliott Management continues to expand its influence in the tech market.

Jesse Cohn has led the push into the notoriously volatile tech space for Elliott, the $25 billion hedge fund headed by Paul Singer. Cohn, senior portfolio manager and head of U.S. equity activism at Elliott, has developed a pattern of buying a large stake in a company and then pushing for changes—and sometimes a sale—to increase shareholder value.

Elliott officials had been pushing EMC to shed its 80 percent interest in VMware and ditch its federation business model involving VMware, RSA, Pivotal and other of its businesses. CEO Joe Tucci pushed back and considered other options, including having VMware buy EMC, while making concessions, including adding Elliott-approved directors and planning to cut $850 million in expenses. Now Dell is buying EMC, a move that met with Elliott approval.

Elliott has about $100 million invested in each company and is recommending that the two merge to create a larger vendor that could better compete in a crowded unified communications and collaboration (UCC) space that is dominated by Cisco Systems and Microsoft.

On the same day that Elliott unveiled its investments in Polycom and Mitel, officials with the hedge fund also said they had taken a stake in UCC vendor ShoreTel, though they didn’t say how large that stake is.

The company in July announced President and CEO Mark Templeton was retiring and that officials were reviewing the company’s operations and options for its GoTo online collaboration portfolio. They also made changes on the board of directors to include an Elliott official, with the promise to appoint another director that meets Elliott’s approval.

Since early 2014, Juniper officials, at the urging of Elliott, have made moves to restructure the business and reduce expenses, including slashing jobs, spinning off the company’s Junos Pulse security business, unveiling a new operating plan and instituting a $3 billion stock buyback plan. There also have been periodic rumors that the company is for sale.

Elliott officials in January revealed an 8 percent stake in Informatica, and in April Informatica announced it was going private in a $5.3 billion leveraged buyout by private equity firm Permira Advisers and others.

Elliott officials last year lauded Riverbed’s technology but said it was underperforming, and the company responded with a restructuring plan aimed at saving $25 million in expenses. In December 2014, Riverbed was sold for $3.6 billion to investment firm Thoma Bravo and others, and taken private.

Elliott in 2013 took a significant stake in storage tech vendor NetApp and urged it to change its board and increase shareholder returns. The company—which is being squeezed by such competitors as EMC and Pure Storage—cut 900 jobs that year, and has followed with workforce reductions a couple of times since. It also grew its share buyback plan to $3 billion and revamped its product portfolio.

Elliott took a large stake in software company Compuware in 2012 and offered to buy it for $11 a share. That didn’t happen, but Elliott pressured Compuware to make changes, including cutting costs, paying dividends and shedding business units. It was bought last year by Thoma Bravo for $2.5 billion and taken private.

Elliott’s interest in BMC Software came in 2012, when it invested in the software maker, then started agitating for board seats, share buyback plans and a sale. Eventually, BMC was bought for $6.9 billion by a group of investors led by Bain Capital and Golden State Capital.

Blue Coat Systems, which makes enterprise security and network software, was sold for $1.3 billion in 2012 to an investor group led by Thoma Bravo.

Elliott officials made an initial bid for Novell, but in 2010 the software maker sold itself to a group of private equity firms for about $2.2 billion. It eventually ended up with the Attachmate Group, which itself was bought by Micro Focus in 2014 for $1.2 billion. Attachmate had been owned by a parent company that included Elliott and Thoma Bravo.