Iomega Corp announced Friday that it will shut down two plants as part of its ongoing restructuring activities. The data storage company is consolidating its entire magnetic technology business at its headquarters in Roy, Utah and told employees last week that its Milpitas and San Diego, California facilities will be closing.
Iomega, which has posted two consecutive profitable quarters largely as a result of its cost-cutting moves, had warned in mid- April that it would cut more staff as it consolidated certain facilities. It reckons that centralizing development will improve quality in the Jaz and Clik! product lines, which were previously manufactured at the two facilities slated to close.
The moves will result in an unspecified one-time charge in the second quarter. Given the fact that the company expects second- quarter results from operations to be comparable to the first quarter (net income of $569,000, or $0.00 on a per share basis), a return to the red in inevitable. Iomega said the plant closures will result in headcount reductions, transfers and reassignments, but declined to provide any specifics. It promises an announcement later in the quarter with respect to the number of lay-offs and the amount of the related charge.
