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Iomega sees $5 million 3Q loss

Excluding yet another round of restructuring charges, Iomega Corp. (NYSE: IOM) expects to lose a little more than analysts predicted.

On Monday, the maker of drives and media for removable storage said it expects to post a third quarter pre-tax loss of about $5 million, or almost 2 cents per share, based on the company's roughly 268.7 million shares average shares outstanding in the second quarter. That loss doesn't include one-time charges including $50 million related to an increase in deferred tax assets and $20 million for restructuring moves that could mean 140 job cuts, mostly outside the United States.

Not counting one-time charges, Iomega has lost money three of the last five quarters. First Call's survey of four analysts predicted a loss of a penny per share.

Third quarter revenue will be slightly higher than the $349 million generated in the previous quarter, the company said.

Iomega will take further restructuring charges of $5 million to $10 million in the fourth quarter. Of $15 million of the total will come as non-cash expenses. Iomega expects an additional charge of $50 million as it increases deferred tax assets.

The expected third quarter loss does include about $12 million in pre-tax, non-cash charges not directly related to restructuring.

Third quarter results will be announced Oct. 14.

Monday's announcement marks Iomega's third restructuring announcement since May. The company this past spring closed two plants in California. In June, it cut 10 percent of its workforce. The latest series of moves include:

  • Closing a plant in Avranches, France, as the company consolidates worldwide media manufacturing.

  • Shifting its Clik! product line to focus on PC card drives

  • Consolidating leased facilities in Utah and Colorado

    Iomega expects to report cash of more than $130 million for the third quarter, which ended Sept. 26. The company had $89 million cash at the end of the second quarter. Although Iomega has a $150 million credit line available, it hasn't borrowed any money on it; the company is now talking to bankers about reducing that credit line and other financial obligations.

    "The actions we're announcing today are more than just cost cutting measures," said David Dunn, Iomega's chairman and CEO. "Based on our recent business reviews we are allocating resources to our most promising products and believe we are building a foundation for achieving sustained profitability and growth. I continue to have great enthusiasm for the value of Iomega's products and software solutions."