Irvine-based networking gear maker Lantronix Inc. didn’t go far to hire Kurt Busch for its top post last week, a move that ends months of turmoil in its upper management.
Busch arrives from Newport Beach- based networking chipmaker Mindspeed Technologies Inc., replacing interim President and Chief Executive Larry Sanders.
Sanders is a former chairman who took over as chief executive of Lantronix in late June in a shake-up that followed the resignations of his predecessor, Jerry Chase, and financial chief Reagan Sakai, who both left under fire.
Sanders will remain with the company during a transition to Busch’s tenure, officials said.
Busch most recently served as senior vice president and general manager for Mindspeed, where he led the company’s $52 million high-performance analog division.
Lantronix makes small electronic devices that allow vending machines, thermostats, retail terminals, ATMs and other machines to be accessed via the Internet or other computers.
Competitors include IBM Corp., Hewlett-Packard Co., Dell Inc. and Cisco Systems Inc.
Busch’s top priority is to develop an updated product strategy for Lantronix as it focuses on machine-to-machine communication for growth.
“Lantronix is carving out the right niche,” he said. “There are many new opportunities and unfulfilled needs in adjacent markets Lantronix can address in the short term.”
He declined to offer further details.
“At this point I don’t want to give away too much of the plan,” he said last week. “I’ve only been here for three hours.”
Busch oversaw the launch of 40 products during his five-year tenure at Mindspeed.
The analog division grew revenue 39% from 2009, accounting for 30% of Mindpeed’s $178 million in sales last year.
He oversaw some 60 employees there, roughly the same amount employed at Lantronix.
Busch was in contact with the Lantronix board for several months before striking a deal, he said.
“I’ve been following Lantronix as a pure spectator for the last couple of years,” said Busch, an engineer by trade who counts more than 20 years in the networking industry. “A good amount of Lantronix revenue is in embedded devices, very similar to the processes of the semiconductor business.”
Other prior stints for Busch include business development roles at Analog Devices Inc. in Massachusetts and engineering, sales, marketing and general management positions at Santa Clara-based Intel Corp., as well as a few Silicon Valley startups.
A University of California, Irvine, alumnus, Busch returned to Orange County five years ago to take the job at Mindspeed.
Lantronix doesn’t have plans to replace interim finance chief James Kerrigan, who was part of the executive makeover, Busch said.
The company is looking to fill a number of executive positions in sales, marketing and other divisions, according to Busch.
Investors sent thinly traded shares of Lantronix up more than 16% Aug. 23 on news of the hiring to a market value of about $20 million.
For the nine months through March, Lantronix had sales of $37.3 million, up 8% from a year earlier. The company lost $1.7 million versus a loss of $1 million a year earlier.
Rocky Past
• Headquarters: Irvine
• Business: networking and communications devices
• Founded: 1989
• Ticker symbol: LTRX (Nasdaq)
• 2010 revenue: $49.1 million
• 2010 profit: ($2.2 million)
• Notable: hired new chief executive from chipmaker Mindspeed
Busch’s hiring ends a rocky chapter for Lantronix.
Chase and Sakai departed in May over complaints raised by the company’s largest shareholder, Bernhard Bruscha, also a Lantronix director and cofounder.
Bruscha’s TL Investment GMBH, based in Germany, owns 38% of Lantronix.
Those complaints led to an internal investigation that found improper use of travel expenses and stock options, as well as misleading statements made during conference calls with investors and analysts.
Chase, in a resignation letter, said he disagreed with the findings and called the probe “flawed and unfair.”
Last fall, Bruscha pushed for the ouster of Chase and the company’s former chairman, Lewis Solomon. Bruscha claimed the company’s management and directors had presided over “lackluster” results and had a “lack of vision.”
Challenge Dropped
In November, Bruscha dropped his challenge in exchange for the company’s backing of him and another candidate for seats on the board.
Sanders began as chairman two months later with that agreement in place and a proxy battle averted.
Tensions between Bruscha, Chase and others remained.
A decade ago, Lantronix restated revenue for 18 months covering 2000 and 2001, eliminating about $7.4 million in sales. A 2001 accounting error stemmed from recorded shipments to German distributor Transtec AG.
The products later were returned to Lantronix after the company completed a stock sale.
Bruscha was a director at the time and also controls Transtec, where he’s chairman.
He was part of a Securities and Exchange Commission investigation into the transaction but wasn’t found to have committed any wrongdoing.