Storage peripheral maker
Iomega Corp. is putting into motion plans to restructure its business first unveiled in July. The company has cut 38 percent of its staff — about 1,250 workers worldwide. Iomega told analysts and shareholders that it expects to see approximately $65 million in charges related to restructuring during this quarter.
In July, Iomega announced a second quarter loss of US$35.9 million dollars, blaming slow sales of its Zip and Jaz products. The company announced at that time plans to restructure. The board of directors also authorized a one-for-five reverse stock split, pending shareholder approval.
Iomega president and CEO Werner Heid, who was hired this past June, said that the company has made “some very difficult but necessary steps” to bring the company back to profitability.
“Our goal in the short term is to significantly lower the break-even point of this business, stop the revenue decline and improve operational efficiencies. We have the products and the people to succeed in our core mission, which is to deliver reliable and easy-to-use removable storage products with world-class service and quality,” said Heid.
Of the 1,250 or so workers affected by the restructuring, almost 800 are employees in Iomega’s North American operations. Another 90 employees in Europe have received their walking papers, and close to 400 employees in Iomega’s Asia Pacific operations have had their jobs cut. Iomega said that the payroll cuts are being made across the company’s operations. Iomega has also announced plans to streamline its product offerings to save money. The company will also vacate some leased facilities throughout the world, and write-down manufacturing, information technology and other assets.
Iomega once dominated the removable storage media market with its small Zip and Jaz storage systems. In the intervening years, many computer makers and consumers have turned instead to CD-RW drives. Many companies, like Apple, now offer CD-RW capable drives as standard equipment on many models, making the addition of a third-party storage system unnecessary. CD-R media have become lower cost than Zip or Jaz media, with durability and performance that consumers and businesses find adequate to the task.
Iomega has struggled to interest computer users with products like the Predator CD-RW and the PocketZip, a diminutive storage system meant to compete with flash memory cards. It’s an uphill battle for the struggling storage product maker, which has found competition from a flood of new players in the memory card, removable storage and CD-RW markets.