Feeds

Iomega cash pile looks tempting takeover target

Spend it, quick?

  • alert
  • submit to reddit

Internet Security Threat Report 2014

ComputerWire: IT Industry Intelligence

Iomega Corp now looks a sitting duck for a takeover as it sits on a $453.9m cash pile while its stock market value is a pitiful $483.4m. After hacking back costs, the San Diego, California-based company is milking increasing sums from its Zip drives but acknowledges that revenue will continue to slide in the coming year.

With $285m of its cash stashed in banks outside the US, Iomega would find the US government grabbing a 39% share if it was to be brought home, so an overseas buyer would find it a particularly attractive asset. Iomega has run out of ideas. It says that it has no plans to use its cash pile, and at a time when it desperately needs to expand its product line, cut its R&D budget last year by 26.8% to $36.2m.

In the fourth quarter to December 31, net income was $17.8m, up from income of $3.9m on revenue 18.4% lower at $153.8m. For the year, revenue was $34.7m, up from a loss of $93.3m on revenue that fell 26% to $614.4m.

Iomega, which had revenue of $1.5bn in 1999, has been on the slide for some time, and CEO Werner Heid said it must expect continued revenue decline in the Zip product line, which last year provided 77.9% of total revenue.

Iomega's failure extends further. Revenue from CD-RW dropped 23.2% to $79.5m, Jaz sales crashed 78.3% to $14m while PocketZip managed revenue of just $996,000, compared with $6.9m the previous year.

The one growth area has been in traditional storage products where revenue rose 82.9% to $41.3m. It has high hopes for its SAN products for the SME sector though it may be some time before these turn a profit.

Where Iomega has been remarkably successful is cutting back its cost base to generate more profit on shrinking revenue. However, this is inevitably a short-term strategy and unless Iomega uses its resources to buy a company that can offer revenue growth, its lack of ambition will see it bought by a management with greater ambitions.

© ComputerWire

Security for virtualized datacentres

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
Lawyers mobilise angry mob against Apple over alleged 2011 Macbook Pro crapness
We suffered 'random bouts of graphical distortion' - fanbois
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
US court SHUTS DOWN 'scammers posing as Microsoft, Facebook support staff'
Netizens allegedly duped into paying for bogus tech advice
Feds seek potential 'second Snowden' gov doc leaker – report
Hang on, Ed wasn't here when we compiled THIS document
Verizon bankrolls tech news site, bans tech's biggest stories
No agenda here. Just don't ever mention Net neutrality or spying, ok?
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
New hybrid storage solutions
Tackling data challenges through emerging hybrid storage solutions that enable optimum database performance whilst managing costs and increasingly large data stores.
Reducing the cost and complexity of web vulnerability management
How using vulnerability assessments to identify exploitable weaknesses and take corrective action can reduce the risk of hackers finding your site and attacking it.