VIEX Sends Open Letter To YuMe Stockholders

YuMe's Claims

Reality

YuMe purports to have outperformed its peers since its IPO. 

→ YuMe fails to disclose that most of its peers went public AFTER YuMe, such that not using each peer's one year data skews their performance. 

• TRMR IPO: 6/27/2013
• YUME IPO: 8/7/2013
• FUEL IPO: 9/20/2013
• CRTO IPO: 10/30/2013
• RUBI IPO: 4/2/2014
• TUBE IPO: 7/18/2014

YuMe claims its "strategy demonstrates traction." 

→ VIEX filed its initial Schedule 13D on October 7, 2015.  Another public stockholder filed its initial Schedule 13D on February 12, 2016.  Since our initial Schedule 13D filing, YuMe's stock price has increased ~22%.  We believe the stock's year to date performance was entirely due to stockholder involvement. 

YuMe claims it has "strong support from Wall Street Analysts." 

→ We are unaware of any Wall Street analysts giving YuMe a "BUY" rating or equivalent on YuMe's stock, proving that analysts remain skeptical. 

Moreover, if you look at one of the analyst quotes cited by YuMe, you will see the analyst was merely stating the Company's opinion and not their own.

Deutsche Bank:  "The company feels like it is on the back side of a rough patch, with the programmatic efforts scaling..."

YuMe claims it has a "demonstrated record of action and shareholder engagement" 

→ In 2Q15 and 3Q15, GAAP operating expense increased $1.1 million year over year and $0.5 million year or year, respectively.  On September 16, 2015, November 17, 2015 and December 9, 2015, VIEX had meetings with CEO Jayant Kadambi and Daniel Springer, the Company's lead independent director. At these meetings, VIEX emphasized the need for YuMe to articulate a strategy generate positive earnings per share, cut operating expenses and better allocate its capital.  On October 7, 2015, November 5, 2015 and December 30, 2015, VIEX publicly demanded more disciplined management of operating expenses.  Under heavy pressure, YuMe cut GAAP operating expenses by 9% year over year in 4Q15.

→ On August 10, 2015, the Company reported disastrous performance and the stock traded down 47% to $2.45.  On October 7, 2015, VIEX publicly called for a self tender to capitalize on the Company's depressed stock price and reduce the Company's overcapitalized balance sheet; which was echoed publicly by other stockholders.  More than FOUR months later, the Company reacted and instituted a $10 million stock repurchase program, but by then, YuMe's stock price had appreciated over 28% to $3.15. 

→ In their preliminary proxy statement filings on March 25, 2016 and April 1, 2016, the YuMe Board recommended "AGAINST" our declassification proposal.  Only when pressured by stockholders did the YuMe Board find governance 'religion' and saw fit to recommend "FOR" our declassification proposal in their definitive proxy statement.

→ If YuMe is open to stockholder input, we must also ask:

• Why are there currently three distinct groups of investors publicly calling for change?  If the Company professes to listen to stockholders, why would three separate investor groups need to publicly voice their concerns? 
  
• Why are we currently engaged in this proxy contest when VIEX has received the public support from the Company's second largest stockholder, owning approximately 10.5% of the outstanding common stock, constituting ~26% of the Company's outstanding stock?

We need a Board that feels a sense of urgency to act to address the significant challenges facing the Company, NOT a Board that takes action only when challenged with a proxy fight.

Elias N. Nader

(Age 50)

• Truly independent director
• Significant Public Company CFO/Controller Experience – currently CFO of Sigma Designs
• Experienced with Segment Reporting, Performance Tracking and Financial Forecasting
• Extensive Global Restructuring Experience – including in EMEA and Asia
• Understands Capital Allocation and Cost Cutting
  • Cut $44 million of costs over a year at Sigma Designs
  • At Dionex, centralized the accounting & finance teams in Europe to one location in Idstein, Germany.  In Asia, centralized the accounting and finance teams in Singapore; saving the company ~$6M in yearly operating expenses.
  • At Dionex, was the Project Manager for ORACLE R12 implementation.  Used inside and outside resources to accomplish this project in a year saving $3.3M in costs.

Eric Singer

(Age 42)

• Largest stockholder – Interests are directly aligned with all stockholders
• Understands Stockholder Accountability
• Understands Capital Allocation
• Experienced with Optimizing Service Provider Relationships
• Experienced with Tracking Performance of Business Segments and Setting ROI Targets
• Significant Public Company Board Experience
  • Current Director IEC Electronics - joined Board in February 2015 as part of a group that replaced entire Board of long underperforming contract manufacturer. Within 90 days, stabilized Company's operating performance and restored profitability.
  • Former Director PLX Technologies - stock price increased from an unaffected price of $4.53 before initial 13D filing to $6.50 sale price in August 2014.
  • Former Chairman of the Board of Sigma Designs - within six months on the Board, returned SIGM to profitability after five straight quarters of
    massive operating losses.
  • Former Director Zilog, Inc. - within one year on Board, returned Company to positive EBITDA despite effects of 2008 recession and market turbulence.