Milton Friedman wrote a piece in 1970 which said that the sole responsibility of a corporation is to increase its profits. Somewhere along the line, that got translated into "increase shareholder value", which is the mantra students hear parrotted throughout business school. However, with a material percentage of stocks now held for less than 2 months, companies must ask themselves what they should focus on: longterm value or short term moves that might hurt your company's long term viability. These short term moves include reducing R&D, freezing wages which drives out your best employees, in some cases stock buybacks, etc.
The answer? I would like to say companies should only focus on value investors (e.g., people like Buffett who invest in companies for the long-term), but does a company have a right to ignore a group of shareholders who want short term results? I believe it does, as long as management and the board are clear about its focus and objectives. So in the end, companies should still focus on "increasing shareholder value", but just make sure they are clear about what shareholders they are focused on.