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Iomega waves goodbye to 145 staff

Son of Clik costs dear

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Iomega is waving goodbye to 145 staffers and temps - a quarter of its workforce. The cuts will cost it $5m-$7m in severance payments and property get-outs. But it expects to save $30m-$35m a year from the move.

Most of the axed jobs comes from Iomega's recently-abandoned digital capture technology (DCT) development programme. The company is taking an asset impairment charge of $4m-$6m, mostly non-cash writedowns, to cover the wind-down of activities

The DCT team had designed a removable mini-drive weighing nine grams and holding 1.5GB capacity for camcorders and portable video players, as well as portable PCs and smart handheld devices. In July 2003, Iomega announced that a "select group of OEMs" were evaluating the technology - which we dubbed 'Son of Clik', in recognition of the firm's earlier ill-fated attempt to build a storage line for consumer electronics makers. Iomega expected to see the drives in products in Q204. Well, Q204 has come and gone, but customers are notable by their absence. According to El Reg hardware editor Tony Smith, CE manufacturers are simply too wedded to solid state storage.

In July this year, Iomega announced its intention to abandon DCT, following a whopping loss of $19.8m on sales of $77m. Iomega is cutting back because its expenses-to-revenue ratio was out of whack with its competitors. The company still hopes to license DCT, but the closure of the DCT division shows also that it was too small to support such an ambitious project.

It will now concentrate around its REV product line, a removable hard drive technology pitched at back-up applications for businesses both big and small. It will also focus on its NAS products. ®

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