Tom Sandell Loads Up On Shares Of Viavi Solutions Inc (VIAV) & Unleashes Letter To Board

Sandell Asset Management has been pushing for change at Viavi Solutions Inc (NASDAQ:VIAV) since last fall, which finally resulted in the company announcing the departure of Thomas Waechter, its Chief Executive Officer, on August 11. Tom Sandell has not stopped at that however, and is now pushing for an overhaul of the board of directors. He is also urging the company’s management to contract an operational consulting firm and a financial adviser to explore possible scenarios for value growth. Sandell has offered two alternatives himself: one which involves the sale of the company and another that would make good use of the company’s deferred tax assets. He argues shareholders would receive more than $10 per share should the company sell itself. Under the second scenario, the value of each Viavi share could climb higher than $12 per unit. Sandell suggests the company should sell its remaining two businesses and transform itself into a platform business. Citing the examples of Jarden Corp (NYSE:JAH) and Platform Specialty Products Corp (NYSE:PAH), he believes the company is in a great position to profit handsomely from its $4 billion to $4.5 billion in net operating losses accumulated over the years.

“From our settlement discussions, you should be aware that we have identified a number of truly outstanding candidates for the Board of Directors. Furthermore, we have made it very clear that the ultimate composition of the Board is but one component of what must be a sweeping improvement in the overall governance and management of the Company, which would include a thorough re-evaluation of the Company’s strategic alternatives, the retention of a new financial advisor and operational consulting firm, and the identification of a new management team capable of extracting value from the Company’s deferred tax assets relating to its multi-billion dollar balance of federal, state, and foreign net operating loss carryforwards (NOLs),” writes Sandell in the letter.

Viavi Solutions Inc (NASDAQ:VIAV) has a market cap of $1.27 billion and does not pay a dividend. So far this year, the stock has been trending downwards, losing approximately a third of its value along the way. For the thirteen weeks ending June 27, Viavi Solutions reported revenues of $427 million, down by 4.6% year-over-year, and a loss of $0.08 per share. Analysts expect the company to turn profitable in the current quarter, eyeing revenues of $212 million and earnings of $0.06 per share.

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