Lake Forest’s Comarco Inc. is a shell of its former self.
The company has pared down in the past year by selling two of its three businesses in a bid to get out of red ink.
Comarco now consists of its remaining business, which designs and markets slim power adapters that charge notebook computers, digital cameras, cell phones and other mobile gear.
The line of ChargeSource power adapters has Hong Kong’s Lenovo Group Ltd., one of the top five PC makers, as its top customer.
“The power adapters are what we are betting the company on,” said Fredrik Torstensson, vice president of sales and marketing for the division.
Comarco had a tough time staying afloat while juggling three unrelated product lines, he said.
For the three months through in July, Comarco posted sales of $8 million (including recently sold-off units), up from the $2 million it reported a year earlier.
The company narrowed its loss to $1.6 million, less than the $2.2 million it lost during the same period the previous year.
About a year ago it hired Palo Alto-based Pagemill Partners LLC to help review its business model and “improve shareholder value.”
“You had three separate things under this public envelope,” said Mark Chapman, general manager of the company’s wireless testing unit. “The divisions had very little overlap and little rationale for being under one roof.”
A month ago Comarco agreed to sell a division that makes equipment used to test and maintain wireless networks to Switzerland’s Ascom Holding AG for $13 million.
The deal, which is set to close in January, stemmed from a longstanding relationship between the two companies.
Ascom and Comarco had been jointly developing technologies and collaborating on marketing and sales, Chapman said.
Comarco’s former wireless testing gear is sold to most of the major cellular service providers around the world.
A few of its biggest North American customers that Ascom will claim are Canada’s Rogers Communications Inc., Dallas-based AT & T; Inc. and Verizon Wireless, a unit of New York’s Verizon Communications Inc.
The testing gear places calls, sends text messages and downloads data automatically, simulating a cell phone user on a network.
Drivers load them into trucks and drive around the carriers’ service area continually to “exercise” the network, Chapman said.
It helps diagnose weak spots and tests out the carrier’s cell phone towers and antennas.
In July, Comarco sold its business making and servicing emergency roadside call boxes for about $3 million in cash in a management-led buyout by newly formed Case Systems LLC.
The business had been lagging for years as city governments opted not to install and upgrade call boxes, which were seeing less use as more people relied on cell phones to call for roadside help.
Tough Climb
The new Comarco has got a big climb ahead.
Shares are off about 80% in the past year and no analysts currently track the stock. The company had a recent market value of about $8 million.
It’s still unclear as to what its operations will look like.
The company has about 88 workers, down from roughly 140 a year ago. The dozen or so workers from the call box unit stayed in Lake Forest, but moved down the street to a different office.
The wireless testing division, headed by Chapman, is set to operate as a subsidiary of Ascom and should largely stay in place.
The ChargeSource division will operate as a public company in the same building as the wireless testing unit.
The power adapters made by Comarco are dubbed “universal” because they can be used to charge multiple devices in different locations, including outlets in airplanes and cars.
Comarco’s power adapters automatically adjust electricity levels to charge different devices.
The adapters Comarco makes for PC maker Lenovo are sold as accessories to its notebooks.
Some 10% of the people who buy Lenovo notebooks also buy the power adapters, Torstensson said. He expects sales from Lenovo to bring in $15 million to $20 million a year.
It also sells adapters manufactured under the brand name of Redwood City-based Kensington Technology Group, part of Acco Brands Corp., in electronics stores.
The ChargeSource division reported revenue of $3 million for the three months ended July.
A few weeks ago Comarco won a second deal with Lenovo, which is set to sell Comarco’s next-generation line of adapters starting in June.
The new adapter is cheaper to make and is set to boost Comarco’s profits.
Next year, expect Comarco to roll out a new line of adapters to be sold in stores.
