Iomega abandons Zip and DVD, fires 120
Damage control at Iomega - two days ahead of the release of its second quarter results, the company announced a "restructuring plan" to be able to return to profitability. According to a statement released today, Iomega intends to "realign its product lines" and lay off 120 of its 360 employees. While the company declined to comment on details, a statement said that Iomega will focus on harddrive-based products, as well as its NSS and Rev series. Apparently, the future product strategy does not include CD/DVD burners and the product Iomega’s success is built on : The famous Zip drive.
This announcement could soften effects on Iomega’s stock caused by the quarter results to be released on Thursday, July 28. Cost reduction is always well received with investors - and Iomega plans to save between $38 and $42 million in the second half of 2005 as a result of the restructuring. Restructuring charges are expected in the range of $8 to $13 million.
The company posted a net loss of $5.9 million for the first quarter of this year. (THG)