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Iomega admits to reduced revenue, profits

Zip sales not what they were

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Iomega's Q4 results will show a dip in both revenue and earnings, the company has warned.

The figures, due on the 18 January, will see around a 25 per cent fall in sales compared to the same period last year. Then, Iomega recorded revenues of $434 million - this time round, expect the figure to be between $325 million and $330 million, company treasurer Tracy Welch said.

Earnings are likely to be in the two to four cents a share band, well down on the 11 cents a share Wall Street has been expecting, according to First Call's average.

Essentially, the problem is a fall in sales of Zip drives and disks, and the Iomega's increased ad spend to counter that dip. Iomega's solution is to cut costs further - a move that last year put it back into profitability after a long stint in the red - but it's hard to see what more it can do. Zip sales have been slowly shrinking over the past few years, as have Jaz shipments.

However, Iomega is expecting much of its upcoming Peerless multi-gigabyte (5GB, 10GB and 20GB) removable storage system, which is effectively the successor to Jaz. Peerless puts all the heads and the platters into the disk unit, which should ensure rather better data integrity than is usually the case with removable hard drives. And Peerless' single drive unit supports multiple interface standards, including FireWire/IEEE 1394 and USB, through a variety of plug-in modules. ®

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