ROY -- Iomega has been "bleeding money" because it too hastily threw cash at products it was developing. But the company is stronger now that executives whose focus was on their own fortunes have left the company.
That blistering commentary sounds like it could have come from a critical investment analyst or a disgruntled former employee. But instead the characterizations come from Iomega chairman David J. Dunn, who announced last week that retired General Electric executive Bruce Albertson will be Iomega's new president and chief operating officer. Iomega's board will likely add "chief executive officer" to Albertson's title in January.Albertson was scheduled to make his first public appearance with Iomega during the COMDEX computer trade show in Las Vegas Tuesday. He will be Iomega's third president in 18 months -- a protracted season of financial losses for the Roy-based computer data storage company. Dunn has been the company's acting chief executive since August, when then-CEO Jodie Glore announced he was leaving.
Dunn said Albertson has the know-how to overcome marketing missteps that have cost Iomega a bundle. The company reported a third-quarter net loss of more than $78 million.
"I wouldn't say we've had financial trouble as much as I would say we've had management trouble," Dunn said Friday. "We have extraordinary products. Iomega has sold 30 million Zip drives and 180 million Zip disks. Our brand name in the computer industry is one of the best, without question."
Iomega's Zip line remains the company's cash cow after first-round problems with production flaws and customer service problems were remedied. Then, "We spent the profits on I'd say just poor new product development, new product introduction," Dunn said.
Iomega spent $150 million developing its clik! line of miniature 40 megabyte storage disks and drives.
"Clik! is a great device with a promising future," Dunn said, but he characterizes the development process as a disgrace. "We were in such a rush to get it to market that we let our costs get away from us. We did a poor job in estimating the market and a poor job in introducing it to the market."
Glore was still in charge when five key executives left Iomega in June, two days before the company announced it expected to lay off 450 workers and take a second-quarter charge of $45 million. At the time, Glore characterized the departures as "just a kind of normal progression."
"I would not discuss it as a normal evolution," Dunn said Friday of those departures. "It was abnormal, but I think of real benefit to the company."
Executives that were recruited four CEOs ago, when Kim Edwards ran Iomega, came to the company "with their eye on a stock price that was growing at 100 percent or more a year," Dunn said. "All of a sudden, things slowed down, profits disappeared and the price came down and they weren't getting rich. In a lot of cases, I think they felt they were entitled to get rich and thought 'gee, it wasn't my fault the engine had faltered,' so to speak, so they were very unhappy and tried to think up ways the company could compensate them for their failed expectations. Reality finally set in last May or June, and a bunch of those people left."
Tyler Thatcher, a former Iomega director of investor relations, is now director of corporate finance and investor relations at Campus Pipeline, an Internet startup in Salt Lake City where his colleagues include several former Iomega employees.
"I can't speak for anyone else in the group, but I thoroughly enjoyed my time at Iomega. Looking at the trends that have occurred, particularly in technology, the real progress and real opportunities are being generated in software and the Internet," Thatcher said.
"That's why I decided to get into the Internet space. It's a once-in-a-lifetime opportunity."
The revolving door to the CEO's office at Iomega has seen Dunn characterized as a difficult man to work for -- a corporate equivalent of New York Yankees boss George Steinbrenner.
"I read that some time ago," Dunn said. "I just wondered how Steinbrenner felt about it."
"I try not to be a loose cannon, but I think the characteristic I probably share with him is I make very quick decisions," Dunn said. "But the worst thing you can do when you're bleeding money like Iomega was doing is not sit down and make decisions."
In addition to Iomega's proprietary computer storage products, the company announced in June it would begin putting its name on a line of CD-rewritable drives, competing with a number of other name-brands that offer similar products.
Dunn calls original plans for a Colorado headquarters for the CD-RW operation a 131,000-square-foot "Taj Mahal" that has been scaled down to a 12,500-square-foot building. "It will be a lean, mean operation so we can be successful in that field."
Iomega will use its name and established distribution channel to make the new line profitable, he said. Iomega also is leveraging its success on its CD-RW software development by offering a software fix for chip-based flaws in CD-RW drive technology common on the market. "To the best of our knowledge, the other suppliers haven't found the problem and don't have the fix for it."
Dunn oversaw cost cutting as the interim CEO at the same time he had headhunters out looking for a new chief executive. Albertson and Iomega had previous contact, and the former GE executive was on the company list of people likely to be interested in the job. "I think he called me first, but I would have called him if he hadn't," Dunn said.
Albertson brings a strong business plan to Iomega, along with a marketing savvy that has been lacking, Dunn said.
"We were looking for someone who had proven confidence as a manager and who could provide professional skill in marketing and sales."