Irvine-based networking gear maker Lantronix Inc. will eliminate about a dozen positions, or 11% of its work force, in a restructuring aimed at conserving cash amid soft demand.
The cuts, primarily in North American sales and administration, began last week and will continue through December, Chief Executive Kurt Busch said.
Research and development is unlikely to be affected, and the company will debut new products and update older ones in coming months, he said.
Lantronix makes electronic devices and software that allow medical equipment, security devices, smart meters, motor vehicles, thermostats, retail terminals and ATMs to communicate securely online. Competitors include Alabama-based Avocent Corp. and Digi International in Minnesota.
The job cuts are expected to save Lantronix about $2 million annually, Busch estimated.
Lantronix will incur a $300,000 quarterly charge for severance payments and related costs, according to a Nov. 10 filing with the Securities and Exchange Commission.
The company has struggled to maintain profitability in a year marked by corporate squabbling, an executive shake-up and internal investigations that combined to cost the company more than $2.2 million.
Lantronix lost $1.4 million in its September quarter, when sales dropped 9% to $11.2 million from a year earlier. It finished the quarter with about $4 million in cash and investments on hand.
Busch was hired in August to solidify the management ranks and cut costs in a bid to regain profitability.
Last week, the company said it will move contract manufacturing of console servers from Malaysia to San Marcos in San Diego County in January to “improve responsiveness to fluctuations in customer demand, shorten lead time and mitigate rising freight costs.”
The move plays into Busch’s focus to increase margins back to historic levels of 49% to 51%, and lower inventory and operating expenses.
Key Hires
Busch has made several key hires to stock his management team, including:
• Robert Robinson, a 20-year industry veteran named vice president of worldwide sales. Robinson also will oversee distribution. He most recently served as vice president of enterprise sales and marketing for GlobalTrack, a South Africa-based provider of monitoring software.
• Mak Manesh, who recently rejoined Lantronix as vice president of product management. Manesh spent more than seven years at Lantronix as product manager before going to Santa Ana-based Newport Electronics Inc. as director of networking.
• Tom Buckley also returned to Lantronix as senior U.S. sales director. Buckley came back after a brief stint as sales director for Hawthorne-based Symmetry Electronics Corp., an electronic components distributor. Buckley had served as director of sales for Lantronix for more than eight years.
In early October, Jeremy Whitaker was named chief financial officer after spending the past nine months as vice president and corporate controller for Newport Beach-based networking chipmaker Mindspeed Technologies Inc.
Busch came from Mindspeed, replacing interim Chief Executive Larry Sanders.
Sanders was a former chairman who took over the top post in late June in a shake-up that followed the resignations of his predecessor Jerry Chase and finance chief Reagan Sakai, who left under fire.
Chase and Sakai departed in May amid complaints by the company’s largest shareholder, Bernhard Bruscha, also a Lantronix director and cofounder.
That 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. In a resignation letter, Chase disagreed with the findings and called the probe “flawed and unfair.”
Sakai recently became chief financial officer for BlueCava Inc., an Irvine-based device recognition and anti-fraud software maker.
Bruscha’s TL Investment GMBH, based in Germany, owns 38% of Lantronix.
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.”
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, but tensions between Bruscha, Chase and others remained.