Last week one of AOL’s biggest shareholders, Starboard Value LP, sent a letter to the AOL board of directors calling of a change of direction in the way the company has been operating and making use of its assets. In their letter they call action to help unlock the true value of AOL’s patent portfolio and licensing agreements from those intellectual properties. Of the recent deal with Microsoft, Starboard offers this commentary from the letter:

“Although management stated its intention to ‘return a significant portion of the proceeds to shareholders,’ we do not understand why the Company would only return a ‘significant portion’. Why wouldn’t the Company simply return all of the proceeds? We remain concerned that shareholder capital will continue to be used for poorly conceived acquisitions and investments into money-losing initiatives like Patch and other Display properties.”

Starboard says they want to help AOL, but they insist the current structure and day to day operations are not taking full advantage of the assets available to them to increase the value for their stockholders. Here’s what they claim their plan of action will be:

“As such, we intend to promptly file preliminary proxy materials with the Securities and Exchange Commission for the election of directors to the AOL Board at the upcoming 2012 Annual Meeting. We remain willing to engage in a constructive dialogue regarding the qualifications of our nominees and a mutually agreeable resolution on board composition. We believe this would be in the best interests of all shareholders.”

Some other shareholders at AOL haven’t taken a liking to this rigid and hostile stance at Starboard and are coming out to support the administration’s current path exclaiming, “Starboard is proving to be a real distraction and they are potentially destroying value to some degree”.

Supposedly this uprising from Starboard puts the billion dollar patent deal on the back burner for AOL who had hoped to have it completed by the end of 2012. There is no word on what action AOL will take to defend agaist these advances from Starboard of if they are working to resolve the differences mutually.