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Iomega posts another stinker in third quarter

Struggling disk-drive maker Iomega Corp. (NYSE: IOM) posted a wider-than-expected loss in its third quarter Thursday, dropping $78.3 million, or 29 cents a share, on sales of $356.6 million.

First Call consensus expected it to lose only 3 cents a share in the quarter.

Not that anyone would notice, but Iomega's shares closed off 1/16 to 3 5/16 ahead of the earnings report.

Earlier this quarter, Iomega fired off the latest in a long line of profit warnings, telling analysts that it would lose around $5 million in the quarter.

It turned out to be much worse.

The $356.6 million in sales represents a 9 percent decline from the year-ago quarter when it lost $14.8 million, or 6 cents a share, on sales of $391.7 million.

Company officials blamed this latest disappointment on lower-than-expected revenue from its Jaz and Ditto product lines.

"We continue to focus on returning Iomega to sustained profitability. Iomega's 1999 third quarter pre-tax income, excluding the restructuring and other charges, was about $7 million," said CEO David Dunn in a prepared release. "Our actions have been taken with the objective of creating a solid foundation for future profitability that will then lead to further growth."

Those actions included the axing of more than 10 percent of its workforce in June.

In the quarter, Iomega did manage to ship 2.9 million of its popular Zip drives, bringing the total number of units shipped to more than 29 million. Last quarter, it shipped 2.5 million Zip drives.

Investors looking for a silver lining might find Iomega's press release less than reassuring.

"(Iomega) is optimistic about achieving profitability in the fourth quarter. However financial results in the quarter will be heavily dependent on a number of factors, including the success of recently introduced products, recurrence of typically strong fourth quarter sales, and the Company's ability to resolve current Zip drive component constraints."

In what might be a related announcement, Iomega announced that Jodie Glore has resigned from the company's board of directors.

Iomega shares were trading at 10 3/16 in January but fell to a 52-week low of 3 in September.