Iomega Corp duly reported a second quarter net loss before restructuring charges of $19.8m yesterday, in line with the profit warning it issued last month (CI No 3,686). Revenue for the quarter was $349m, down from revenue in the same quarter last year of $394m. Iomega recorded a pre-tax restructuring charge of $41.9m to cut 450 jobs and close facilities, making its total after tax loss for the period $47.1m. In its 1998 second quarter, the company posted a $39.9m loss, including restructuring charges of $9.4m.
Gross margins fell to 22% from 24% in the same period last year. But Iomega said its inventory, at $138m, was the lowest in 12 quarters, and said it had generated around $33m in positive cash flow during the quarter. We are very comfortable with our liquidity president and chief executive officer Jodie Glore said. The cost cutting measures would result in annual cost savings of $40m beginning next year, he said.
Shipments of Zip drives during the quarter rose 27% over the same period last year to 2.5 million. Zip disk sales grew 24% to 17.2 million. But Zip revenue still dropped 4% to $274m, and Iomega is still struggling with constraints on Zip drive components. Jaz drives sales dropped drastically by 24% and revenue dropped 25%, with a corresponding drop in Jaz disks. Clik! removable drives and disks – the company’s best hope for future growth – shipped late in the second quarter. Around 4,000 drives and 22,000 disks were sold, generating $1m in revenue.
