Iomega is still operating in the red but has significantly boosted its shipment of Zip drives and disks and has drastically cut operating expenses and inventory levels, the company reported Thursday.
Iomega reported a net loss of $7.6 million for the third quarter. The total after-tax loss for the quarter was $14.8 million, or 11 cents per diluted share."We let the market know we're committed to returning to profitability by the end of the year, if not sooner," President and CEO James E. Sierk told shareholders at the company's annual meeting in April. "We expect a positive cash flow in the next three quarters."
"Sooner" didn't happen, and cash flow for the third quarter was $21 million in the red before the $45 million cost of acquiring Nomai S.A., a competing disk maker Iomega sued and then bought to keep the corner on the market for Zip-compatible disks.
The company's latest projection is that cash flow for the year will be negative.
Iomega has been shipping its flagship Zip drives at little or no profit to manufacturers in its effort to make Zip drives a PC industry standard and replacement to the 3.5-inch floppy drive.
Iomega has been quite candid in saying a boost in Zip disk sales is what will steer the company back into the black. Third-quarter figures show Iomega shipped 2.4 million Zip drives during the quarter, an increase of 39 percent over the same period in 1997; and shipped 30 percent more Zip disks than during the third quarter of 1997.
PC makers like market leader Dell Computer have been willing to make Zip drives widely available in their PCs. But Michael Dell, founder and CEO of Dell Computer, said last week he is skeptical PC buyers are using the drives now that multi-gigabyte hard drives and powerful network servers are filling many needs for computer storage space.
Analysts have speculated the success of Zip disk sales and the establishment of Iomega's newest storage product, Clik!, would determine long-term profits.
Clik! drives feature a miniature 40 megabyte removable disk in a small drive device promoted for hand-held computing devices, digital cameras and smart cellular phones. Clik! drives are expected to be available soon at a street price of about $200 with disk prices, when bought in multiple packs, starting at $9.95 each.