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Tuesday, Mar 19, 2024
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Lantronix Moves Turn Red Ink to Black

Irvine-based Lantronix Inc. says it’s getting back to solid footing thanks to a series of restructuring moves initiated in the last six months.

The company has been on a campaign to cut costs, lower inventory, identify growth opportunities and raise capital.

“We feel this is the right foundation moving forward,” said Chief Executive Kurt Busch. “And now the financial results are starting to show it.”

Lantronix makes electronic devices and software that allow secure online communication with medical equipment, security devices, smart phones, motor vehicles, meters and thermostats, retail terminals and ATMs.

Busch was hired in August with a mandate to return operations to profitability.

Executives pointed to Lantronix’s recently released financial results as evidence that turnaround efforts are taking hold. The company posted an adjusted profit of $471,000 in the March quarter, ending a string of three consecutive quarterly losses.

Inventories were slashed 20% from the previous three months to $6.8 million in the March quarter. Higher inventories had led to cash flow problems, which in turn had been causing Lantronix to miss suppliers’ payment deadlines.

“The company has rushed to bring down accounts payable in the last three quarters,” he said.

That line item was trimmed by nearly half during the last nine months to $4.4 million.

Lantronix recently released four new products including an external print server that’s compatible with Apple Inc.’s iPads, iPod touch, iPhone and other devices running the Cupertino-based company’s mobile operating system. The product—which connects personal devices to home or office printers remotely—is designed for small to midsize businesses and was developed and manufactured in just four months.

“I’ve been doing product development for more than 20 years, and I’ve never done something like this before,” Busch said.

The quick pace was welcomed by employees, who had seen the company struggle to maintain profitability during a period marked by corporate squabbling, an executive shake-up and internal investigations that combined to cost the company more than $2.2 million.

“It was a huge moral boost to work on it,” he said.

The xPrintServer supports thousands of printers from brands such as HP, Brother, Epson, Canon, Dell and Xerox. It has garnered industry accolades including Best of Show and Mac Observer Editors Choice awards at this year’s Macworld expo.

Lantronix also recently introduced a medical aggregator—which allows healthcare professionals to access data in separate locations—along with a high-performance Wi-Fi device server and what the company bills as the world’s smallest embedded device server that acts as a miniature computer.

Busch said the new product road map will quadruple the company’s “addressable market” to $2.8 billion.

Lantronix recently raised $9.3 million through a private placement and public stock offering.

“We’ve been under a working capital crunch,” Busch said.

The transaction slightly increased the stake held by Lantronix’s largest shareholder—German investor Bernard Bruscha’s TL Investment GMBH—to almost 41%.

Lantronix’s competitors include Alabama-based Avocent Corp. and Digi International in Minnesota.

Lantronix is considered small by Wall Street and Nasdaq standards, with annual revenue of about $50 million and a market value about half that size.

The company has garnered outsized headlines the last few years—mostly negative.

Boardroom turmoil hit a boiling point about a year ago, when former chief executive Jerry Chase and financial chief Reagan Sakai resigned amid complaints by Bruscha, a Lantronix director and cofounder. The 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, according to the company.

Chase said in a resignation letter that he disagreed with the findings and called the probe “flawed and unfair.”

Larry Sanders, a former Lantronix chairman, took over as interim chief executive in late June as part of the executive shake-up. Busch arrived in August from Newport Beach-based networking chipmaker Mind-speed Technologies Inc., replacing Sanders.

Busch served as senior vice president and general manager for Mindspeed, where he led the company’s $52 million high-performance analog division.

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