Iomega profits up, shares stable
Although Iomega announced positive fourth-quarter results late yesterday, but investors seem nonplussed.
The stock closed at 18-1/2 a share, down 3/8 of a point from yesterday.
The company, which last month announced plans to slash its domestic work force by up to 700 jobs as it increased production in Malaysia, reported that fourth-quarter profits more than doubled.
Iomega posted net profits of $20.4 million, or 15 cents a share, for the quarter ending December 31, compared with profits of $9.9 million, or 8 cents a share, a year earlier.
Excluding a one-time $9.1 million charge for the layoffs and relocation of its European headquarters, the portable storage drive maker would have posted earnings of $25.9 million, or 19 cents a share, for the quarter.
The company fared better than analysts' earnings estimates of 19 cents a share, according to First Call.
Revenues more than doubled to $397 million for the quarter, compared with $148.8 million a year ago.
"We are particularly proud of the fact that fourth-quarter 1996 sales and earnings exceeded sales and earnings for all of 1995. We have significantly improved our international operations and we entered 1997 with an experienced, battle-hardened management team, and a solid foundation to support our 1997 growth strategy," said Kim Edwards, chief executive and president, in a statement.
Iomega's operations in Malaysia reached volume production faster than anticipated, resulting in the company's plans to cut its domestic workforce. The cost reductions were seen as a way for the company achieve its goal of supporting a $99 retail price for its Zip drives.
The gross margin for the quarter was 29 percent, compared with 31 percent a year ago.
Iomega's net profit for the year was $57.3 million, compared with $8.5 million the previous year.
Revenues reached $1.2 billion for the year, up from $326.2 million in 1995.
"We are pleased to have delivered $1.2 billion in revenue for 1996--272 percent growth over last year. Iomega has now sold over 4 million Zip drives and we are approaching 7 million personal storage solutions consisting of Zip, Jaz, and Ditto," Edwards said.