Just as expected, Iomega Corp. Thursday posted an overall financial loss of $47.1 million, or 17 cents per diluted share, for the recently ended second quarter.
And though Iomega executives said they hope for an after-tax return on sales in the mid-single digits for the rest of the year, they admitted that such success will depend on more factors going right than wrong.That's something the Roy-based manufacturer of data storage drives and disks has not been able to count on lately.
Last month, Iomega announced plans to lay off 450 people, including some in Utah, as it closed California facilities in San Jose and San Diego and consolidated its Nomai operations in France and Scotland.
Those moves resulted in a second quarter restructuring charge that hit $41.9 million, accounting for 10 cents per share of the quarterly loss. The net loss not counting the charge would have been $19.8 million, or 7 cents per diluted share.
The total loss with the charge compared to a loss of $39.9 million, or 15 cents per share, for the same quarter of 1998. Revenue for this year's second quarter fell compared to the same period of last year, from $394 million to $349 million.
But Jodie Glore, Iomega president and chief executive, said the company now is poised to return to "sustainable profitability."
"We anticipate that the steps we have taken . . . will result in annual cost savings of approximately $40 million beginning in the year 2000," Glore said. "As we eliminate excessive overhead, we will be much better positioned to capitalize on the strength of our existing products and on the growth opportunities of our new products, including our Clik! PC Card Drive, which we shipped late in the second quarter."
Iomega shipped 2.5 million of its Zip drives during the second quarter, along with 17.2 million Zip disks. The company also shipped 122,000 Jaz drives and 4,000 Clik! drives.
During a Thursday conference call with industry analysts, Glore said he expects the company's momentum to continue.
"We intend to have all of our product lines, not just Zip, contributing to our profitability," Glore said.
But he added that positive financial results for the rest of the year will depend on the success of new product offerings, the results of the seasonally strong fourth quarter and the company's ability to resolve current Zip drive component constraints.
Glore also said the company plans to roll out a Y2K initiative, complete with an educational program and "aggressive" media campaign, late in the third quarter.
With the year 2000 computer bug looming, Glore said, "it is more important for all of us to back up and protect our data."
Glore also faced questions about the departure last month of three Iomega executives -- including the treasurer and chief operating officer -- and two other key officials. He said company restructuring sometimes creates changes "that may not be in line with the personal objectives or career goals of everybody."
"We'll have some significant announcements on people becoming a part of the team" within the next month or so, Glore said.
Iomega's stock closed down 6 cents, or about 1.3 percent, at $4.69 Thursday prior to the earnings announcement. In early trading Friday on the New York Stock Exchange, the stock price was down another 13 cents, or more than 2 percent, at $4.56.