Iomega returns to profitability, begins reorganisation
Two senior execs call it quits as storage firm announces it made money in Q4 98.
Troubled removable storage specialist Iomega yesterday recorded its first profitable quarter of 1998. The company posted profits of $19 million, equivalent to 7c a share, up on the 5c a share Wall Street had expected Iomega to file. Still, the Q4 98 figure 90 per cent down on the $36.1 million profit the company made in the same period last year. Iomega CEO Jodie Glore, who took over that role last October, also announced a company-wide reorganisation that will merge the company's separate professional and personal storage divisions. That decision prompted the resignation of Fred Forsyth and Ted Briscoe, presidents of those divisions, respectively. The reorganisation may involve the loss of further jobs -- don't rule them out, warned a spokesman -- but the company said it does not expect to take a charge for the move. Whether the reorganisation will be enough to improve the company's outlook remains to be seen. In many ways, it has followed the example of its erstwhile arch-rival, SyQuest, the assets of which Iomega announced last week it intends to buy. In the late 80s, SyQuest became the market leader in removable storage and, happy with that, chose to rest on its laurels. That allowed it to miss what Iomega was up to, and was largely taken by surprise when Iomega launched its 100MB Zip drive and later the 1GB Jaz. The high demand for those products effectively hit SyQuest hard, which lost money hand over fist. It too was forced to reorganise to deal with its much reduced circumstances, but even that wasn't enough and the company filed for bankruptcy in November 1998. Iomega has the advantage that it has a much wider market profile than SyQuest ever had, and that PC vendors continue to want to bundle Zip drives. Iomega also recently announced, at long last, an upgraded version of Zip and finally, after three years of 'it'll be here next year' messages, launched its Clik drive, aimed at the digital camera market. The technology it hopes to buy from what's left of SyQuest should help Iomega increase both the performance and the storage capacity of its products, allowing its drives to keep up with the increases in hard drive capacity, which have long left Jaz and Zip behind. ®