Sybase Inc. (NYSE:SY) is starting to feel the heat from shareholders demanding that the company evaluate strategic alternatives. Sandell Asset Management indicated in a Schedule 13D filing with the SEC that they want the software maker to consider a buyback, spin-off or sale of the company.

Thomas Sandell argued that Sybase could create $33 per share in value through a $500 million share repurchase over three years. Alternatively, the hedge fund manager suggested that Sandell cold spin-off its mobility segment and generate $31 to $33 per share in value. And finally, in an outright sale of the company, Sandall believes shares could go for as much as $41.39 in a leveraged buyout.

Sybase responded to the requests yesterday indicating that they would review recommendations from shareholders to boost its stock price in the context of the regular reviews it makes of its business. Given that Sandell owns a six percent stake in the company, it is likely that these proposals will receive at least some real consideration.

"Our Board of Directors regularly reviews the subjects in your letter, including use of cash, configuration of the business, and other strategic opportunities to drive shareholder value," said Sybase chief executive. "Sybase welcomes the views of its shareholders, and the Board will consider your letter in that regard."

In the end, shareholders are hoping that the company will take at least some of these proposals to heart and unlock value in shares that have not seen much movement. Whether or not this happens remains to be seen, but this is definitely a stock worth watching!

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