ValueAct Capital, the “activist investor” group that is (justifiably) unhappy with the returns from Microsoft’s Xbox video game console business, has officially been offered a seat on the company’s board of directors.
The “cooperation agreement” between ValueAct (who invested $2 billion last April to become one of the company’s 15 largest shareholders with an approximate 0.8% stake) and Microsoft was announced Friday afternoon in a press release — which was put out just in time to get buried over the course of the long Labor Day weekend.
According to the announced details, ValueAct Capital president Mason Morfit will be involved in “regular meetings” with “selected Microsoft directors and management to discuss a range of significant business issues.” ValueAct will also be given “the option” of having Morfit take a seat at the company’s board of directors in the first quarterly board meeting after the 2013 annual shareholders meeting. The investor group has been actively pushing to join Microsoft’s board, so you can expect Morfit to happily take them up on the offer.
“Microsoft is a world-class company with tremendous long-term potential,” Morfit said. “At this critical inflection point in the company’s evolution, I look forward to actively working together with the board and Microsoft’s management team to continue to create value for all shareholders.”
It is not entirely clear how ValueAct will proceed once they officially join Microsoft’s board of directors, but it would not be unreasonable to expect the group to push for some major changes. One of the most likely goals that Morfit has set his sights on could be the sale of Microsoft’s entire Xbox business.
We will have to wait and see if ValueAct Capital pushes for the sale of the Xbox division, but this is not a possibility that fans should simply dismiss. Overall, the Xbox and Xbox 360 have not been good financial investments for Microsoft shareholders. If the Xbox One stumbles after it launches this November it could give Morfit an opening to refocus Microsoft’s efforts towards their more profitable divisions.