Iomega Names New CEO; Sees Q2 Loss
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As Utah-based data-storage concern Iomega Corp. names a new chief executive officer (CEO) to replace one who left the company over differences in strategic direction, the company said it would incur a second-quarter loss and lower revenues from year-ago levels.
Revenues in the second quarter of 2001 may be in the range of $180 to $190 million, down significantly from revenue of $304 million in the second quarter of 2000, Iomega officials said. As a result, the company said it expects to report a Q2 pre-tax loss of between $41 million to $62 million, including charges of $33 million to $50 million.
"The revenue shortfall in the second quarter is due mainly to lower Zip and Jaz revenue," said Philip Husby, Iomega's chief financial officer, in a statement. "Sales of HipZip, FotoShow and CD-RW have also been below our expectations. We expect to record charges in the second quarter that reflect our best judgment regarding the net realizable value of HipZip, FotoShow, and CD-RW inventory at Iomega and in Iomega's retail and distribution channels, possible loss accruals for related supplier purchase commitments, and other charges."
Iomega also cautioned that actual results for the second quarter, which ends on July 1, 2001, may be higher or lower based upon a number of factors, including sales activity for the remainder of the quarter, sales and inventory data collected from Iomega's channels that may impact revenue recognition, and ongoing assessments of the charges required to appropriately reflect the net realizable value of inventory, possible loss accruals, and other charges.
The company plans to announce second quarter results after Tuesday's stock-market close.
The company said it continues to examine opportunities to reduce costs. Last week, Iomega said it would consolidate its worldwide manufacturing operations at its Penang, Malaysia, manufacturing facility. The company expects to undertake additional cost reduction actions, which will likely result in additional charges in the third quarter of 2001.
Iomega also said it named current board member Werner Heid as the company's new president and CEO. The company's former CEO, Bruce Albertson, resigned from the company last month, with company Chairman David J. Dunn stating at the time, "Bruce's resignation is, in large part, the result of differences between Bruce and the board over the long-term strategic direction of the company."
Heid brings 16 years of experience in the computer peripherals industry and has been a member of Iomega's board of directors since May 2000. Heid will continue to serve on Iomega's board of directors, officials added.