Irvine-based networking gear maker Lantronix Inc. is revising its executive suite and business strategy in the wake of last month’s executive shake-up.
Finding a new chief executive and chief financial officer likely will top the agenda for the company’s board meeting on Monday.
A focus on cloud computing, improving product launches and cutting internal red tape are likely to follow.
It will be the first board meeting since former chief executive Jerry Chase and financial chief Reagan Sakai resigned under fire last month. The two departed over complaints raised by the company’s largest shareholder.
Those complaints led to an internal investigation that found improper use of travel expenses, stock options and misleading statements made during conference calls with in-vestors and analysts.
Chase, in a resignation letter, said he disagreed with the findings and called the probe “flawed and unfair.”
Lantronix makes small electronic devices that allow vending machines, thermostats, retail terminals, ATMs and other machines to be accessed via the Internet or other computers.
Competitors include IBM Corp., Hewlett-Packard Co., Dell Inc. and Cisco Systems Inc.
Larry Sanders, who recently took over as interim chief executive, already has begun pushing some aggressive changes to eliminate what some employees have called unnecessary reports and procedures. Sanders also has cut down on meetings and other internal red tape.
“We’re moving aggressively to understand the problems in the company and respond to people’s concerns,” said Sanders, 65, who came out of retirement to shepherd the transition.
His immediate priorities center on stabilizing the workforce, calming investors and managing cash in the hopes of ending the quarter on a high note after months of boardroom tensions.
“It’s always upsetting when something like this happens, but morale is good right now,” Sanders said.
“Coffee With the Chairman”
Sanders said his three-plus years on the board have given him a chance to get to know many of the 100 or so local employees. He also established a “coffee with the chairman” series to build rapport.
Lantronix executives also have had a “very honest and forthright discussion,” with seven major investors and “they’re all going to stick with us,” according to Sanders.
Lantronix’ shares are thinly traded and have dropped about 25% since early June to a market value of $29 million.
For the nine months through March, Lan-tronix had sales of $37.3 million, up 8% from a year earlier.
The company lost $1.7 million, versus a loss of $1 million a year earlier.
“With all the travails we’ve been through, we’re probably cheapest cloud computing play in the market,” said Sanders. “It doesn’t take much of a trade to move it down.”
The turn of events provided an unexpected homecoming for Sanders, who has his primary residence in La Quinta and spends summers in Corona del Mar. He lived in Tustin in the 1980s and early 1990s while he held executive positions at Calcomp Technology Inc., once part of Lockheed Corp.
Sanders became chairman of Lantronix in January amid an ongoing disagreement over the roles of the board and senior management. The fight was pressed by Bernhard Bruscha, a Lantronix director, cofounder and the company’s largest shareholder.
Bruscha’s TL Investment GMBH, based in Germany, owns 38% of Lantronix.
Challenge
Last fall, Bruscha pushed for the ouster of Chase and the company’s former chairman, Lewis Solomon. Bruscha claimed the company’s management and directors had presided over “lackluster” results and had a “lack of vision.”
In November, Bruscha dropped his challenge in exchange for the company’s backing of him and another candidate for seats on the board.
Sanders began as chairman two months later with that agreement in place and a proxy battle averted.
Tensions between Bruscha, Chase and others remained.
Sanders garnered unanimous approval
from the board last month to take over as chief executive and stepped down as chairman.
“If you’re looking for an interim CEO as caretaker than you have the wrong person,” he said. “Bernhard and I have had our disagreements but when it comes to important stuff we have a passion for the company and its employees.”
As part of the executive shuffle, James Kerrigan was named interim chief financial officer.
