NEW YORK — An institutional shareholder of Compuware Corp. (Nasdaq: CPWR) sharply criticized management for the Detroit company’s most recent earnings disappointment, and urged the immediate auction of the company.

In a letter to Compuware CEO Robert C. Paul, Sandell Asset Management CEO Thomas E. Sandell said that if Compuware doesn’t move immediately to auction itself off, it will “pursue a change to the board composition at the next annual meeting.”

Sandell’s letter said the shortfall of sales and earnings vs. analyst expectations for the fourth fiscal quarter ended March 31 was just the latest example of Compuware’s “tendency to over-promise and under-deliver, and poor execution.”

Compuware management blamed large software orders that it thought would close by March 31, but which instead got pushed into the new fiscal year. Replied the Sandell letter: “We suggest that the real reason for the poor Q4 performance is management’s inability to execute operationally. The fact that you have disappointed the investment community, and all of your stockholders, with weak fundamental performance in three of the last four quarters convinces us that current management cannot be trusted to realize the significant value we see in the company. We believe that the only viable path to maximize stockholder value, rather than destroy it, is to execute a sale of the company to the highest bidder as promptly as possible.”

Lisa Elkin, Compuware senior vice president for marketing and communications, issued this statement about the Sandell letter: “As we have said, the board continues to be committed to carefully reviewing and evaluating any credible offer it receives that delivers full value to its shareholders, working together with our financial advisors Goldman, Sachs & Co. and Allen & Company.”


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