Networking gear maker Emulex Corp. has a new Orange County-based chairman and three directors from outside the area.
Bruce Edwards, who has been on Emulex’ board since 2000, has replaced McCluney as the company’s chairman. Edwards, who also serves as a director at Irvine-based networking equipment maker Lantronix Inc. and chipmaker Semtech Corp. in Camarillo, has long ties to base station gear maker Powerwave Technologies Inc., which filed for bankruptcy protection last year.
He was executive chairman of Santa Ana-based Powerwave from 2005 to 2007, and chief executive and a director from 1996 to 2004.
Last month, shareholders of Costa Mesa-based Emulex also appointed three new board members backed by Elliott:
n Gary Daichendt, who has held several senior executive positions at San Jose-based Cisco Systems Inc., the world’s largest equipment maker.
n John Kelley, chief executive of Denver-based brain imaging provider CereScan Corp. in Denver.
n Rahul Merchant, now chief information and innovation officer for New York City, and previously chief information officer at Fannie Mae and Merrill Lynch & Co.
Emulex directors who stepped down were investor Michael Downey, attorney Robert Goon and tech consultant Don Lyle. Goon had been an independent director since the company’s inception in 1979. Downey and Lyle had been board members since 1994.
Former Emulex Chairman and Chief Executive Jim McCluney is, meantime, enjoying a break from Wall Street as he takes a turn as chairman of Octane, an Irvine nonprofit that connects technology executives and companies with sources of capital and various services.
McCluney takes over the chair from Robert Grant, chairman of Strathspey Crown LLC, a Newport Beach-based private equity healthcare investor.
McCluney’s recent exit from the networking gear maker followed several months of skirmishes with New York-based hedge fund Elliott Management Corp. and other dissident shareholders.
“I was fine moving on rather than facing proxy battles,” said McCluney, who oversaw the company’s $130 million acquisition of New Zealand-based Endace Ltd. last year. “I accomplished a lot.”
The buy, one of the largest in the company’s 35-year history, drew questions and criticism on Wall Street at a time when it depleted about 60% of its cash on hand.
McCluney, who coveted the technology designed to record, visualize and monitor network traffic, said at the time that Endace “doubles our total addressable market and places Emulex in another high-margin, high-growth market.”
The emerging segment topped $345.5 million in sales in 2012, up 22.4% from 2011, according to a report by Frost & Sullivan. The San Antonio-based consultancy forecasts revenue to grow at an annual compound rate of nearly 25% between 2012 and 2020.
New York-based Altai Capital, which owns about 5.9% of Emulex, called the deal “perplexing” at the time and urged the company to consider a sale or changes to its board. Elliott joined the chorus of shareholders in opposition.
The deal may have been the final straw for a base of activist investors that had called for a sale in the past.
New Chief Exec
McCluney said he expects new Chief Executive Jeff Benck to guide Emulex past its recent tumult.
The company has lost nearly $100 million in the past three years and hired Goldman Sachs last year to seek a potential sale.
Emulex is a leader in the 10-gigabit Ethernet connection market, a competitive segment that has drawn big industry players into
the fold as storage needs and speedy data transfer become increasingly important with the proliferation of video and streaming content.
It bears watching if Emulex can convince customers to choose Endace’s technology over others in an era of increasing security threats, demand for peak server performance, and the growth of cloud computing.
McCluney hired Benck as executive vice president and chief operating officer in 2008. Benck took over the president’s role in August 2010 and replaced McCluney as chief executive last July.
“Jeff is a solid leader,” said McCluney, who served eight years in the top post at Emulex. “He’ll put his own mark on the company.”
McCluney said a number of tech companies have asked him to consult on possible takeover targets, investment strategies and operational challenges.
He said he hasn’t ruled out another go running a company.
“I’m trying to keep that option open, but I’m thinking more of an adviser,” he said. “Never say never.”
The Ireland native remains influential in Orange County, supporting several charities and academic endeavors, including the Chief Executive Roundtable at the University of California, Irvine, the Mind Research Institute and Pacific Symphony.
In December he took over as chair of the board of trustees of Costa Mesa-based public television station PBS SoCal. In July he was named to the board of Irvine-based printed circuit board maker Multi-Fineline Electronix Inc.
McCluney’s role at Octane will center on working with Chief Executive Matthew Jenusaitis to expand awareness and fulfill his strategic vision and operational goals of the nonprofit.
“Last year was the best year in Octane’s history,” McCluney said. “My ambition is to make this one even better.”
