Data storage products manufacturer Iomega Corp delivered third- quarter results in line with its earlier warning, posting a net loss of $78.3m, or $0.29 per share, compared to a loss of $14.8m ($0.06) in the year-ago quarter. Revenue for the quarter slipped 9.0% to $356.6m, but improved 2.2% from the second quarter. The revenue decline was attributed mainly to lower sales of Jaz and Ditto products, which were offset partially by higher ZipCD and Clik sales.
The quarter was hit by a $20.5m restructuring charge, as well as an increase of $51.3m in the valuation reserve for deferred tax assets and a $12.7m non-cash charge related to asset write-downs. Net of those items, the company posted pre-tax operating income of about $7m, or $0.02 per share after tax. Analysts surveyed by First Call were looking for a loss of $0.03. Results for the year-ago quarter include an $11.1m acquisition-related charge.
Iomega had warned earlier that the third-quarter results would show a loss and would be weighed down by new restructuring initiatives during the quarter, including the consolidation of worldwide disk manufacturing and certain leased facilities and refocusing the Clik product platform – all of which resulted in the loss of 140 jobs. Restructuring charges from those moves are expected to total roughly $28m, with the remaining $7.5m to be recorded in the fourth quarter. On the balance sheet, cash stood at $132.8m, compared to $89.3m at the end of the June quarter.
The company said Zip drive shipments in the quarter totaled 2.9 million, an increase of 23% over the prior year, while Zip disk shipments declined 6%. The customer base for Zip now comprises over 29 million drives and 178 million disks. Shipments of Jaz drives and disks were down 23% and 31%, respectively, reflecting what the company says is a maturing of the platform. The Click platform saw 33,000 drives and 92,000 disks shipped. The company also says it has shipped 53,000 ZipCD drives and 45,000 ZipCD disks since the launch of the product in August. Only the Zip and Jaz lines were profitable.
Nine-month net loss was $124.8m on revenue down 8.5% at $1.09bn, against a loss of $73.3m last year. Nine-month results include total one-time charges of $133.4m, while the year-ago numbers include charges totaling $20.5. Iomega said it is optimistic about achieving profitability in the fourth quarter, but would be no more specific in its guidance and warned that the success of recently-introduced products and the ability to resolve current Zip drive component constraints would play a major factor. Analysts surveyed by First Call are expecting positive earnings of $0.04.
The company also said Thursday that Jodie Glore, who resigned in August as the president and chief executive, has now stepped down from the company’s board of directors. Acting CEO David Dunn said the search is on now for Glore’s permanent replacement and said he expects the process to take about three-to-nine months. á
