Google Inc. (NDAQ: GOOG) has announced it will sell a branch of recently acquired DoubleClick called Performics – a marketing firm that helps websites increase their ranking on search engines.

Facing an obvious question about conflict of interest – because Performics tries to increase rankings most prominently on Google's own search engine – the decision should help silence at least some possible concerns. Performics is a small wing of DoubleClick, which Google finalized purchasing three weeks ago for $3.2 billion.

Facing prickly questions about possible conflicts of interest, Google Inc. will sell a recently acquired service called Performics that helps Web sites improve their ranking on online search engines, including Google's.

"It's clear to us that we do not want to be in the search engine marketing business," said Tom Phillips, who oversaw the DoubleClick purchase, wrote in a Google blog. "Maintaining objectivity in both search and advertising is paramount to Google's mission."

The decision, announced Wednesday, comes three weeks after Google picked up Performics as part of the online search leader's $3.2 billion purchase of online ad service DoubleClick. Performics has about 200 of DoubleClick's 1,500 total staff.

In other housecleaning measures, Google is also planning to layoff 300 employees, according to much cited unnamed sources, These employees are presumably redundancies created from the DoubleClick deal – this would be the biggest loss of employees in the company's 10 year history. These layoffs are not unexpected as CEO Eric Schmidt acknowledged their possibility in documents published at the close of the DoubleClick deal.

Given Google's exponential growth – it now has more than 18,000 employees – a loss of 300 jobs is not materially significant, but it does perhaps signal the end of the company's era of unfettered financial and hiring growth. Such 'cutting of the fat' is seen by many analysts as online advertising, which drives Google's profits, comes to plateau for the foreseeable future. Google's stock has lost about a third of its value this year.

Hopefully these decisions signal a conscious and thorough effort by Google to improve its bottom-line by carefully examining all its businesses rather than relying solely on ad revenue growth.

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SMTC Corporation (NDAQ: SMTX) is barking up the wrong tree according to one major activist investor. Red Oak Partners voiced its concerns with the company's chronic under-performance in relation to its peers. In fact, the electronics manufacturer is the only company in its peer group that has grown neither revenues nor EBITDA during the past three and four year periods. The only thing the company does beat out all of its peers on is executive compensation! Many shareholders feel that these problems require new blood to fix and are demanding change.

Red Oak sent a letter to the board making several recommendations. First, the hedge fund demanded that the company remove shareholder-unfriendly provisions from its bylaws. These provisions may have been necessary in the past, when the company was struggling to raise money, to fend off vultures but they are now outdated. These provisions include staggered board elections and limits on the number of board candidates that can be proposed. The removal of these provisions would allow shareholders to more easily make their voice heard.

Red Oak's second demand was to add a board member and consultant with experience in building and selling manufacturing and assembly businesses. The goal behind this move would be to maximize shareholder value through a sale of the company at some point in the future. With $250 million in revenues and just $12 million in EBITDA, there are huge cost savings that could be obtained through a buyout. These cost savings could be passed on to shareholders through a higher buyout price. To this end, the hedge fund nominated Rich Effress, who has the necessary experience.

The final recommendation made by Red Oak is a change in the compensation committee to ensure objectivity, independence and performance. The compensation at this company is the highest among its peers while its performance has been the lowest - clearly there is a disconnect. The compensation for board members is also too higher, reaching $370,000 in 2006 for only five individuals. This is nearly double that of other companies with its profitability and value. And finally, they recommended a switch from restricted stock to stock options in order to better align management with shareholders.

"As the largest shareholder - by a wide margin - we ask that our recommendations be heard and strongly considered in the best interests of all shareholders and not just for us," said David Sandberg of Red Oak Partners. "We think it is important to begin a meaningful dialog as to the most effective way to enhance shareholder value and address the concerns and recommendations listed above."

Shares moved up over 6 percent on the news Thursday.

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Spanish Broadcasting System (NDAQ: SBSA) is under pressure from at least one activist shareholder disappointed with the company's performance. Discovery Group demanded a list of shareholders today in an effort to put pressure on the board to act by encouraging them to withhold their votes. The activist hedge fund also aims to draw awareness to its campaign to unlock value in a company whose shares have dropped from $20 in 1999 to under $2 now.

Discovery Group sent a letter to the board about a month ago demanding that it form a special committee to explore strategic alternatives, including a going-private transaction, sale to a strategic party, or at least the adoption of modern corporate governance practices. Current management has failed to build value internally by spending money on acquisitions that provide no incremental value and failing to growth operating income at all.

Spanish Broadcasting holds many properties that would be of great interest to an acquiring party. The company enjoys a market leadership position, operating in highly attractive geographic markets and is situated in the most promising media genre. However, CEO Alacron has refused to entertain any offers that would involve him relinquishing control of the company. This includes offers that have already been made at a substantial premium to today's price.

Discovery Group validated these claims with an anecdote in their February letter:

"We now know this claim to be justified because we have direct knowledge of an important public media company (“XYZ”) that is interested in a potential transaction that could yield a substantial premium to the current SBSA stock price, yet Mr. Alarcon refuses to engage in an evaluation of this opportunity. During a meeting with Mr. Alarcon in December 2007 members of our firm presented the rationale for a combination with XYZ, to which SBSA would bring great strategic value and substantial, immediate cost synergies. Mr. Alarcon concurred with the analysis and suggested that we get the reaction of XYZ’s management to the idea.

"Our team met in January 2008 with XYZ’s Chairman/Chief Executive Officer and its Chief Financial Officer. We communicated to Mr. Alarcon that the XYZ officials were very enthused about the possible combination and wish to engage in a further dialogue directly with Mr. Alarcon. Mr. Alarcon is also in possession of detailed materials prepared by Discovery that outline a proposed structure for this transaction which yields a premium in excess of 100% to SBSA shareholders.

"Suddenly and without explanation, Mr. Alarcon refuses to discuss this opportunity. While Mr. Alarcon’s change in posture is consistent with his industry reputation, it is surprising nonetheless. Mr. Alarcon’s resistance in this case cannot be attributed to valuation because the proposed structure gives him the option to either remain invested or liquidate his shares. Rather, it appears that Mr. Alarcon fears a loss of control. That fear is interfering with Mr. Alarcon’s ability to act in the interest of all shareholders."

It is clear that there is a lot of value that can be unlocked if Discovery Group can successfully pressure Spanish Broadcasting into at least entertaining such offers. Moreover, a simple move to modernize governance practices would enable shareholders to more forcefully make demands designed to maximize value. In the end, this is a valuable company being held back by a poor management team, but Discovery Group aims to change all that.

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