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Iomega continues to shed red

Q3 profits worse than last time

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It may have briefly returned to profitability during the first quarter of its current fiscal year, but trendy storage specialist Iomega has clearly fallen back into its loss-making rut. Yesterday, it posted its Q3 results, which showed a loss of $78.3 million on revenue of $356.6 million (down nine per cent on the same period last year, but up a little on last quarter). That's worse than last year's Q3 loss of $14.8 million and Q2 1999's $61.7 million. Last quarter's loss was increased by a massive $41.9 million restructuring charge -- this time round the charge fell to $20.5 million, though the company's new chairman and CEO, David Dunn, warned that the Iomega's next quarter would take a further restructuring charge of around $7.5 million. The Q3 results also included non restructure-related items totalling $12.7 million and $51.3 million transferred to the company's reserves to offset future taxation. Still, Dunn reckons the company will be back in the black next quarter. Iomega is betting its future on its 40MB Clik! drive, which it's now pushing as a removable storage medium for notebooks, rather than the consumer electronics devices it was originally designed for. Sales of Clik! drives are unlikely to counter the collapse in Jaz Sales, which continue to fall by a double-figure percentage, since the company has yet to make any money here thanks to promotional costs. Q4 profitability will largely depend on sales of Clik! and ZipCD (the company's CD-R product) picking up sufficiently to cover what Iomega is spending on advertising. Iomega's Zip and Jaz sales are profitable, but with Jaz shipments falling and Zip shipments pretty much static, they're not likely to contribute too much to the company's growth. ®

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