Ipass Inc., which helps companies ensure secure access by remote employees to their network, is fighting off demands from shareholder Shamrock Activist Value Fund that the company find a buyer.

Burbank, Calif.-based Shamrock Activist Value Fund issued a pointed statement late Monday, March 3, demanding that the Redwood Shores, Calif.-based company put up the For Sale sign. The open letter to Allan R. Spies, the leading independent Ipass director, castigates the board for destroying so much value in the company, and accuses it of trying to strike a side deal with Shamrock.

Five years after its initial public offering, the company is generating growing revenue streams, but it has been restructuring, generating higher operating costs and booking high tax-related charges, which have led to losses. As a result the company's shares have lost about 43% in the past year.

The shares on Monday closed up 0.7% at $2.80, giving the company a market capitalization of $174.7 million. It has $75 million in cash and short-term investments and no debt. The shares had traded about $28 in September, 2003.

``Because of the weakness we have witnessed in management and the board during the three years we have been shareholders, and the absence of any clear board initiatives to reverse the tide of the ever-declining iPass share price, we remain convinced that now is the time to sell the company,'' said the letter from Shamrock principal Stanley P. Gold. ``We believe maximum value can be achieved for iPass shareholders if the company's business were sold to a strategic buyer with greater resources and management depth.''

Ipass did not immediately respond to the release of the letter.

Gold's letter noted that Shamrock, which he founded with Walt Disney heir Roy Disney, asked the board to begin an auction process in January, but the Ipass board declined. The Ipass board warned that any public call for a sale could be ``harmful'' to the company, said the letter, though Shamrock noted company managers should be able to conduct an auction while managing the company soundly.

The letter harshly criticizes the board for squandering investments of $150 million on acquisitions and research and development since 2004, including the $90 million acquisition of Milpitas, Calif.-based GoRemote Internet Communications Inc. in 2006. Gold said the result of all this spending has been a $40 million decrease in operating income, from plus $29 million to minus $11 million, and a fall in revenues (excluding acquisitions) of 11%.

In February, Ipass reported a fourth-quarter loss of $30.8 million on revenue of $50.0 million, compared with a $3.8 million loss on revenue of $45.2 million. The big reason for the decline in the most recent period was a $27.1 million provision for income taxes. Gold's letter also said an Ipass director recently asked Michael McConnell, a Shamrock board designee, whether the activist fund would consider selling its Ipass shares. Gold said the company would do nothing that would not benefit all shareholders.

IPass in the past has relied on Credit Suisse for financial advice. -- Peter Moreira