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Micronics shakes up management

Micronics' management shake-up is the system-board manufacturer's latest move to restore its status as a Silicon Valley success story.

Floundering system-board manufacturer Micronics (MCRN) announced a shake-up of its senior management today that officials say will restore the company?s status as a Silicon Valley success story.

President, CEO and Director of the Board Shanker Munshani stepped down, and was replaced by William Shelander, a private investor and member of the Micronics board since 1990, who now becomes chairman and CEO. Munshani left "to pursue other interests," and will be retained as a consultant, according to the company.

Faced with two years of losses and steadily declining revenues, Micronics has responded with frequent staff reorganizations in both its management and engineering departments, and this quarter laid off 30 percent of its work force. Micronics recently explored the idea of merging with Hayes Microcomputer Products as well, with unsuccessful results. Despite such efforts, Micronics has been unable to respond to the challenge posed by chip giant Intel, whose entry into the motherboard business in 1994 spelled trouble, if not doom, for the smaller company.

"That was really the beginning of the end for Micronics," said Dataquest analyst Nathan Brookwood. "They originally had a corner on the market for high-performance motherboards...but when Intel entered the market and combined reasonable quality, good performance, and reasonable price, Micronics was never able to recover." (Intel is an investor in CNET: The Computer Network)

Micronics has pursued various revitalization strategies since then, said Brookwood, including launching a server operation and shifting some business from its OEM-based sales to distribution-based sales. None of these endeavors, however, slowed the company's downhill slide.

Brookwood criticized Micronics? former management for its failure to respond to the changing realities of competing with Intel, and for its lack of customer relations and marketing savvy.

Other players in Micronics' game of musical chairs include Fred Dietrich, formerly with Pentad Securities, who becomes president, and Jim Timmins, of Glenwood Capital and Redwood Partners, who joins the board of directors.

Dietrich said the company was in a good position to turn over a new leaf.

"I look at this as a start-up," he said. "We're a start-up with no debt, with more than $20 million in cash on hand, fully owned with no mortgage against the building or land, with very talented people, very good products, and a customer base that's excellent. I think this is an excellent opportunity looking forward, and I plan to play a leadership role, which may have been the one ingredient that was missing. "

Dietrich blamed the company's woes on the former management, members of which he said "didn't have the ability to run a large company." He said the new team had formed a committee of senior managers that would work toward putting the company "back in the limelight, where [Micronics] should be."

When asked what specific measures the new management might take to turn the company around, Dietrich said Micronics would "continue building a very good product and making it available to OEM customers in a timely manner."

Timeliness has been one of Micronics' major problems in the post-Intel motherboard world. Whereas Micronics used to be among the first to bring boards to market, Intel has since beefed up technology support among its Taiwanese vendors to such a degree that Micronics? previous time-to-market advantage is now lost, according to Brookwood. "Time-to-market was one of their keys," he said.

Micronics' stock, which traded as high as 3 7/8 earlier this summer, rose slightly on news of the shake-up to close at 2 1/2, up 1/8.