Iomega takes Q2 drubbing, plans layoffs

A product transition has hit computer drive maker Iomega Corp., which Thursday announced a net loss of $35.9 million, or 13 cents per diluted share, for its second fiscal quarter ended July 1. That compares with profits of $40.4 million and 15 cents per diluted share for the same quarter last year.

The company announced plans to reduce its workforce by between 800 and 1,100 employees and said it would undertake a five-for-one reverse stock split.

Iomega said it was hit by the slowing economy and the PC industry's technology transition from Zip and Jaz drives -- the company's revenue bread-and-butter -- to CD-RW drives with comparatively less expensive prices for recording data. Iomega's reported $184.1 million in revenue for the second quarter was $119.5 million less than the $303.6 million the company drew in during the same quarter last year. That represents a decrease of about 40%.

Iomega said it took charges of $46 million against earnings, mostly to write off the value of inventory in its HipZip digital audio players, FotoShow digital image centers, and CD-RW drives and discs, along with loss accruals for related supplier purchase commitments.

The company also said it plans to relocate its headquarters from Roy, Utah, to the West Coast, looking for a bigger pool of technology workers. That move will require the layoff of between 800 and 1,100 workers. That comes on the heels of job cuts announced last month, when the company said it would trim 110 manufacturing jobs to consolidate equipment production at its Penang, Malaysia, facility.

The company plans to seek shareholder approval to perform a five-for-one reverse stock split. Iomega shares closed yesterday at $1.98 and slipped in trading today. Iomega's stock price is down about 77% from its 52-week high of $7 last November.

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