An investor group is pushing computer networking products maker Lantronix Inc. to evaluate strategic alternatives to boost shareholder value, “including but not limited to a potential sale of the company, acquisitions, divestitures, partnerships, joint ventures, or other transactions,” according to a recent regulatory filing.
Lantronix has agreed to seek the assistance of a bank or investment advisor as part of the effort, though it is not obliged to pursue or carry out any transaction, according to a June 30 filing with the SEC.
After shares of Lantronix in 2021 topped $10 each, they’ve been on a downward trajectory, hitting as low as $1.91 in April. Since then, they’ve rebounded to $3.21 and a $125 million market cap at press time (Nasdaq: LTRX).
The Irvine-based company provides computer and connectivity products for the Internet of things (IoT) and Edge AI applications. Its portfolio includes AI-enabled gateways, embedded systems, and camera modules designed for smart cities, industrial automation, and autonomous navigation.
The Lantronix commitment to evaluate possibilities comes as part of a “cooperation agreement” with the investor, which is named Chain of Lakes Investment Fund.
The fund said as part of a separate SEC filing dated July 1 that the Lantronix shares “were materially undervalued and represented an attractive investment opportunity.”
The investors group owned a combined 7.9% of Lantronix shares as of May, according to the filing with the SEC.
Chain of Lakes claimed that the Lantronix board “had been highly ineffective at creating any sustainable shareholder value since the Issuer’s shares began to be publicly traded on Aug. 4, 2000.”
‘Highly Inefficient,’ Investment Firm Says
The public company structure left shareholders “at serious risk of further value degradation” of its public market valuation, the Minnesota-based investment firm told the SEC.
Still, the strategic alternatives to be considered will also include “continuing to operate as an independent publicly traded entity.”
Lantronix entered into the cooperation agreement with Chain of Lakes on June 30.
The agreement with the investors included a commitment to appoint James Auker to the Lantronix board, which will be increased from five to six seats. He will run for election at the 2025 annual meeting. The filings did not specify his connection to Chain of Lakes.
“Lantronix is committed to maximizing value for all Lantronix shareholders,” company CEO Saleel Awsare said in a June 30 statement. “We appreciate the constructive discussions with Chain of Lakes and are pleased to welcome Jim Auker to our Board. His perspective and experience will be valuable as we continue to execute on our strategic priorities.”
Lantronix told the Business Journal on July 17 it was “not in a position to provide additional comments beyond the public disclosures.”
The company’s shares have lost more than 15% of their value in a year’s time.
Lantronix revenue for the quarter ended March 31 fell 31% to $28.5 million on a year-on-year basis, while the net loss widened to $3.9 million.
Mobile Network Deal
Separately, Lantronix on June 26 announced a multi-year agreement with an undisclosed Tier-1 U.S. mobile network operator to digitally transform the management of more than 50,000 backup power systems across wireless cell sites nationwide.
Lantronix will offer its Edge gateways and cloud-based software to enable real-time monitoring, improving network reliability and minimizing operational costs.
“This win positions Lantronix as a key player in the digital transformation of telecom infrastructure,” Kurt Hoff, chief revenue officer for Lantronix said in a statement.
Lantronix was No. 8 on this year’s Business Journal list of fastest-growing companies in the mid-size firm category, based on the company’s two-year revenue growth of 22% to $160.3 million for the year ended Dec. 31, 2024.
