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Emulex CEO Benck Accelerates Changes to Boost Profitability

NEW YORK (TheStreet) - Four months after taking the company's top post, Emulex (ELX) CEO Jeff Benck has shifted the focus of the server components specialist in an effort to boost profitability and shareholder value.

Emulex, which was the subject of sale chatter earlier this year, announced a $200 million share repurchase on Monday while making changes to its board of directors and outlining plans to cut costs. 

"This is a very transformational move for the company because it's across a number of dimensions," Benck told TheStreet, in a phone interview. "This is a real step change in the company's strategy in that we're looking at every facet of the business, including changes at the board level to ensure that we're well equipped to be a leader into the future." 

Emulex shares received a boost after the company announced its new strategy and are up more than 25% over the last 6 months. Shares of the server and storage interconnect specialist, however, dipped 0.77% to $7.71 in Wednesday trading. 

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"There's a lot of exciting things going on here, and we can use this as a platform to attract a bunch of new folks to our story," added Benck. 

The CEO is also wants to ensure that Emulex gets a return on its product development investments. 

"I have asked my team to kind of go through every inflight program and go understand - 'is it meeting its objectives'?" he said. "I want to stop doing anything that maybe looked great at the onset, but, as you look into it, you find that the return isn't there." 

With regard to board restructuring, Emulex wants to bring in three new experienced executives and will reduce the size of its board from 12 to 11 members. 

"I think, in general, our board was pretty large for a company our size - consolidating it down a bit is a good thing to do," he said. "Now is the right time for the company going forward to make these changes." 

The CEO also provided an updated on Emulex's $127 million purchase of NetScout (NTCT) rival Endace earlier this year. Endace is now fully integrated into Emulex, according to Benck, with revenue from the network monitoring specialist growing 20% sequentially last quarter. 

Nonetheless, Benck is putting "more feet on the street" to boost Endace sales, as well as exploiting Emulex's global reach.

In terms of the company's overall growth, Emulex is working to expand its channel and do more with business partners, according to the CEO. The firm is also focused on its partner ecosystem, recently announcing a connector to software from big data specialist Splunk (SPLK)

The CEO, however, was less forthcoming on the sale rumors that swirled around Emulex earlier this year. 

"I can't comment on speculations or rumors around M&A," he said, adding that Emulex's new strategy is "making a statement around shareholder value." 

"We demonstrated this week that there's value in this company and our focus right now is on executing our roadmap, being mindful of the spending, improving profitability and then having the mechanism for investors to share in that," he said. "That's 100 percent where my focus is now."

--Written by James Rogers in New York.

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