One Meru investor has hit the headlines by calling for the US networking vendor to be sold, alleging that managers and directors are being paid vast amounts yet achieving little.
Toan Tran, managing partner and co-founder of Chicago-based investor Castle Union, which holds a 5.7 per cent share of Meru Networks and specialises in firms in difficulty, posted an open letter via PR feed addressed to all the company's shareholders.
"We do not believe Meru should remain an independent company, and the Board must immediately commence a sale process," Tran wrote. "The gap between Meru and its peers is startling. Especially telling is the growth Aerohive and Ruckus have achieved relative to Meru."
Tran said that Castle Union had been communicating its concerns about the vendor's "consistently weak" performance to Meru management for months.
"The various concerns we have articulated to the Board include Meru's long history of underperformance relative to its enterprise WLAN peers and the hopelessly sub-scale nature of Meru's business," he wrote.
"Time is of the essence and the time has long since passed for the Board to take proactive steps to maximise shareholder value."
Meru shareholders' annual meeting is scheduled for 22 May.
Tran supplied a Castle Union graph (pictured) plotting Meru's last three years in normalised revenue terms against four enterprise-WLAN rivals: Aruba, Ruckus, Aerohive and Ubiquiti.
In Q1 2011, Meru achieved turnover of $20.1m (£11.9m); three years later, Q1 2014 revenue came in at $20.6m.
"At the $24m mid-point of Meru's sales guidance for Q2 2014, Meru's first-half 2014 revenue will be down 13 per cent from first-half 2013. Over this same period, Ruckus has grown from $21.3m in quarterly revenues to $75m," Tran said.
Aerohive had doubled its Q1 revenue in two years, from $12.5m in Q1 2012 – well below Meru's $19.4m in that period – to $30.2m. Meru has never reported an operating profit, according to Castle Union's figures.
"As one of Meru's largest shareholders, we find this long history of underperformance to be unacceptable and we hope other shareholders share this opinion. The status quo cannot be allowed to continue," Tran said.
Executives were also being overpaid, he asserted: "Director compensation is egregiously high.
"For an even more nausea-inducing revelation, we note that management and director compensation for the last three years totals $15.7m, a full 26 per cent of Meru's current enterprise value. As a major shareholder, we cannot stand idly by."
However, as an acquisition target, Tran continued, Meru could be attractive to a properly resourced buyer, in part because of its good technology and products as well as its presence in a market which is difficult to enter.
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