ROY — Iomega Corp.'s announcement of its corporate headquarters move to the West Coast was coupled with news that the company lost nearly $40 million in the second quarter.
The company's net loss of $35.9 million, or 13 cents per share, compares with net income of $40.4 million, or 15 cents per share, for the second quarter last year.
The loss for the quarter included $46 million in pre-tax non-restructuring charges and $1.1 million in restructuring charges.
Revenue fell nearly $120 million year-over-year, to the second-quarter 2001 figure of $184.1 million. The company cited lower Zip and Jaz product revenue.
"We are disappointed with second quarter revenue and earnings, but are making good progress with our comprehensive review of Iomega's business and its short-term and long-term strategies," said Werner Heid, the company's new president and chief executive officer.
"We will be attacking our cost structure. We will also be focusing on creating demand to foster growth of our installed base, and we will be providing new applications for the Zip drive and other Iomega products people already own."
During a conference call Thursday with industry analysts, Heid said Iomega remains "a viable business" and noted that the general economic downturn had hurt the technology sector, including sales of computer peripherals.
Investors did not take kindly to Thursday's news, which occurred after the stock markets closed. Early Friday, Iomega's stock reached its lowest point of the year, $1.63, down 35 cents, or more than 17 percent, from Thursday's close. The stock has slipped from a high of $7 in the past year.
The $46 million charges in the quarter primarily were for write-downs of HipZip, FotoShow and CD-RW inventory and equipment and loss accruals for related supplier purchase commitments. The $1.1 million figure primarily was attributed to the consolidation of Utah manufacturing operations at the company's Penang, Malaysia, manufacturing facility. That action was announced in June.
Revenues were down across the board. Zip product revenue fell year-over-year by $92.1 million, to $145.2 million. Jaz also suffered, falling by $24.6 million, to $13.3 million. CD-RW revenue fell by $6.3 million, to $18.3 million. PocketZip revenue totaled $2.3 million but was down by $900,000 from a year ago.
Iomega also announced Thursday that its board has approved a 1-for-5 reverse stock split, which will need shareholder approval. If implemented, the move would result in every five outstanding shares of common stock being automatically changed into one share of common stock, reducing about 273 million shares of common stock currently outstanding to approximately 55 million shares.
"We have no way of knowing the short-term impact on Iomega's stock price of the company's various restructuring actions, or how Iomega will be affected by general market conditions," said David Dunn, chairman of the Iomega board of directors.
"The goal of these actions is to make Iomega stronger and more profitable over the long term, with the expectation that these actions will ultimately have a beneficial effect on our stock price."
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