InFocus Corporation (NDAQ:INFS) may now face shareholder retribution after failing to demands made by 11.2% holder Caxton Associates. In a Schedule 13D filed yesterday, Caxton said that "as a result of the concerns previously expressed by the reporting persons in this Schedule 13D, and in light of the unsatisfactory conversations in the fourth quarter of 2006 between representatives of the reporting persons and members of the board and the company's operating management, the reporting persons now intend to call a special meeting of the company's shareholders and to seek to replace a majority of the current members of the board". The fund subsequently filed a Schedule 14A, indicating that it would be soliciting materials from the company in order to conduct a proxy battle.

What are these past concerns? Well according to prior Schedule 13D filing:

"The Reporting Persons believe that the intrinsic value of the Company, and the amount a strategic or financial buyer would pay to acquire the Company, is significantly greater than the current market value of the Common Stock.  The Reporting Persons believe that this gap in value has resulted from the implementation by the Company's Board of Directors (the "Board") of a flawed business plan that has been detrimental to shareholder value. The Reporting Persons accordingly believe that the following steps should be taken promptly in order to preserve and maximize shareholder value:

1. The Reporting Persons believe that the Company's poor performance is the result of mistakes made by management and the Board's failure to grasp the strategic realities of the environment in which the Company operates.  At this time, we believe that the Company's operating management is capable of effectively executing the Board's strategic vision should it be given adequate guidance and oversight.  We do not, however, believe that the Board, as currently constituted, is providing the necessary strategic thinking.  Therefore, we believe that, unless significant changes are made promptly, changes in the Board are in the best interests of all shareholders.

2. The Board should include individuals with strong ties to large shareholders, as well as industry, legal and/or financial markets expertise, which have a firm grasp of the realities of the markets in which the Company operates.  Unless significant changes are made, the Board should be restructured to consist of Mr. Ranson, at least two individuals drawn from among the Company's largest shareholders, and other independent directors with relevant industry backgrounds.

3. As part of the Company's announced exploration of strategic alternatives, the Board should develop an operating strategy that not only protects and enhances the hard asset value of the Company, but also will allow the Company to be cash flow positive under any foreseeable circumstances.  The Board should immediately work with management to develop a business plan that, among other things, permits revenue growth only at a reasonable cost, fixes or exits money-losing operations, and leverages the Company's valuable brand name franchise and considerable intellectual property assets.  This new business plan should be assessed against other available alternatives, including the possibilities of a sale or restructuring of the Company.

The Reporting Persons continue to examine all of their options with respect to the possibility of taking actions that they believe will enhance shareholder value, including the option of actively seeking to replace members of the Board."

Clearly Caxton and other shareholders have reason for concern, especially after the company failed to reply to the fund's demands. This move to solicit information and replace members of the board indicates the hedge fund's conviction in enforcing necessary changes. If the fund is successful, INFS could see significant upside. This makes Infocus a stock worth watching over the next few months as this situation unfolds.

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