Summary:

Jana Partners, the activist group going after CNET (NSDQ: CNET), has published a letter commenting on the company’s latest layoffs and reorg…

Jana Partners, the activist group going after CNET (NSDQ: CNET), has published a letter commenting on the company’s latest layoffs and reorganization. The firm says it is “astounding” that it took the company so long to make a shakeup. It argues that the latest moves are years too late and call into question whether management can be trusted to handle the process of turning things around. It also derides the fact that the task force — a phrase it insists on wrapping in scare quotes — was led by insider CFO Zander Lurie, rather than someone from the outside.

From the firm’s statement: “Although CNET has belatedly said it will examine these fundamental issues, shareholders should ask themselves whether there is any reason to believe that the current leadership will do so successfully. The current board of directors has presided over an almost 50% stock price decline in the last two years through yesterday, yet they failed to demonstrate any sense of urgency to address these basic issues until publicly called on to do so. CNET’s board of directors and much of its senior management team, including its CEO and the head of its “task force”, also lack the necessary sector experience and expertise to address these issues and future challenges effectively.” Full text after the jump

Update: CNET has responded to Jana’s response, but it doesn’t have much to say: just that the company has been making strategic shifts since 2007 and that Jana doesn’t deserve any credit for prompting the latest move. Full statement.

– Meanwhile, Needham & Co’s Mark May predicts the company will save $7-$10 million annually through the restructuring. Beyond the basic savings: “the real value creation opportunity will only be realized if new approaches to IT architecture, SEO, yield management, shared services integration (e.g., sales, IT, etc.) and other initiatives bear fruit.”

AP: Stifel Nicolaus & Co. analyst Kit Spring told clients the moves could save about $9 million but might hamper first-half revenues: “It is our opinion that a smaller work force will make this guidance more difficult to achieve than we previously thought and could be a poor indicator for first-half revenues.”

Jana’s statement: “It is astounding that it has taken years of shareholder value destruction for CNET to even start examining the basics of reversing its ongoing underperformance, and even then only after we began calling for change. Fundamental issues like these that we have raised should have been addressed years ago.

Although CNET has belatedly said it will examine these fundamental issues, shareholders should ask themselves whether there is any reason to believe that the current leadership will do so successfully. The current board of directors has presided over an almost 50% stock price decline in the last two years through yesterday, yet they failed to demonstrate any sense of urgency to address these basic issues until publicly called on to do so. CNET’s board of directors and much of its senior management team, including its CEO and the head of its “task force”, also lack the necessary sector experience and expertise to address these issues and future challenges effectively.

We agree that CNET has failed to address these issues historically and that change is needed. Rather than farming out the challenges facing CNET to a “task force” led by its CFO, we think a better plan is to bring the necessary experience and expertise to CNET’s board of directors, who can work with management to address these issues decisively and effectively going forward. This is why we have proposed new board members who we believe possess the experience and expertise to bring effective change to CNET and maximize value for all shareholders.”

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