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Lantronix Founder, Critic Reassumes Chairman’s Role

Bruscha: his TL Investment is 41% Lantronix stakeholder

Lantronix Inc.’s founder and largest shareholder Bernhard Bruscha has returned as chairman of the Irvine-based networking-equipment maker.

Bruscha—who founded Lantronix in 1989 and served as its chairman from June 1989 to May 2002—pushed for management and board changes in the last year as the company struggled to attain profitability. He replaces Thomas Wittenschlaeger, who took over the chairman’s post last June following some internal turmoil.

Lantronix said Wittenschlaeger resigned the post to focus on executive roles with other companies. He serves as chief executive of KeyOn Communications Holdings Inc., a Las Vegas-based broadband, satellite and voice-over-Internet-protocol—or VOIP—provider and also is chief technologist of NantCloud, a Los Angeles-based company focused on consumer applications for convergence technologies.

The Lantronix board has started a search for an additional independent director.

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. Lantronix initiated a restructuring under Wittenschlaeger, installed new management and turned an adjusted profit in the recently ended quarter after three quarterly losses.

Wittenschlaeger had succeeded Larry Sanders, who held the post for five months. A fight, prior to Sanders’ appointment, was pressed by Bruscha over the roles of the board and senior management. Bruscha pushed for the ouster of then-chief executive Jerry Chase and Chairman Lewis Solomon but dropped his challenge last November in exchange for the company’s backing of him and another candidate for seats on the board.

Sanders began as chairman two months later. Chase and financial chief Reagan Sakai resigned last June amid complaints by Bruscha, whose Germany-based tech-investment firm, TL Investment GMBH, holds a 41% stake in Lantronix.

That prompted Sanders to come out of retirement and take over as interim chief executive last year. He was replaced in August by Kurt Busch, formerly senior vice president and general manager for Newport Beach-based networking chipmaker Mindspeed Technologies Inc.

Divestiture

Irvine-based Western Digital Corp. has completed the divestiture of its business of 3.5-inch hard disks to Toshiba Corp.

The sale was a requirement pushed by international regulators as part of their approval of the company’s $4.8 billion acquisition in March of Viviti Technologies Ltd., formerly Hitachi Global Storage Technologies Ltd. The divestiture also included the transfer or licensing of intellectual property rights, the transfer of personnel and supply of certain disk drive components.

Western Digital’s disk drives go into computers, external storage devices, corporate networks and consumer electronics such as DVR players.

Western Digital, as part of the deal, acquired Thailand-based Toshiba Storage Device Co., which hasn’t regained its hard-drive manufacturing operation since heavy flooding late last year damaged many regions in the country. Financial terms of the Toshiba deals were not disclosed.

Japan-based Hitachi Ltd. now owns roughly 10% of Western Digital’s outstanding shares and has designated two board members. Western Digital recently added Kensuke Oka and Masahiro Yamamura to its board as part of the acquisition. Oka is president and chief executive of Hitachi America Ltd., and Yamamura is general manager of the semiconductor business division of Hitachi Ltd.

The Hitachi buy positions Western Digital to battle for the top position among drive makers. It promises to bring the company key corporate customers and significantly boost gross margins in the coming years through its entree in the growing server and storage market.

Hitachi recently has become an important strategic partner for server and storage manufacturers. That could prove beneficial for Western Digital, as data storage has become increasingly important with the spread of smart phones, tablets and cloud computing.

IBM Order

New York-based IBM Corp. will use Aliso Viejo-based Netlist Inc.’s 16-gigabit memory boards for its HP SmartMemory HyperCloud product geared for rackmount servers.

The networking-equipment maker’s HyperCloud product handles large memory capacity and is billed as improving performance by 25% compared to the industry standard. Netlist Chief Executive C.K. Hong has said the product effectively expands an information highway from two to four lanes.

Netlist makes memory boards with specialized controller chips to manage server memory. Both of its new products are designed to handle traffic and storage needs in high-volume servers amid rising demand fueled by the proliferation of video and data streaming.

The company’s Planar-X memory module adds memory to servers while reducing power consumption and cooling costs.

Both products have been adopted in servers from IBM, which helped Netlist during years of development.

Netlist also is working on a data-restoration product with Santa Clara-based Intel Corp. that targets storage systems; it’s expected to debut this year.

The product aims to recapture server data after power outages.

The product push coincided with Intel’s Romley chip launch in March that’s touted to boost performance while lowering operating costs.

Intel, the world’s largest chipmaker, is targeting data centers with cloud services, memory-product makers and others with the new line of its chips.

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