Iomega Corp.'s president and chief executive officer Kim B. Edwards resigned Wednesday in what industry watchers termed a "shocking development" in Utah's high-tech industry.

James E. Sierk, an Iomega board member and a former senior vice president of Quality and Productivity at Allied Signal Inc., will take over as acting president and CEO.David J. Dunn, chairman, said Sierk does not want to be a candidate for the permanent positions of president and CEO. Dunn said a search will begin immediately to find a replacement for Edwards, whom Dunn credited with being "directly responsible for Iomega's success over the last four years."

Edwards gave no reason for his abrupt departure. He joined Iomega in January 1994 after serving as president and CEO of Gates Energy Products Inc.

"This is a very shocking development," said T.C. Doyle, a Park City resident and senior writer for Computer Reseller News.

David Politis, president of the Salt Lake-based public relations firm Politis & Associates, said Edwards' resignation comes at a difficult time for Iomega, and the fact that Sierk has been named interim CEO suggests the decision was made very quickly.

"The company has been hit with multiple class-action lawsuits over the last few months," said Politis. "The allegations are that the company has been beset by insider trading and that members of company management and those close to the company were aware of the fact that a promised new product was going to be delayed."

That product is the two-gigabyte Jaz 2GB drive that was slated for delivery in late 1997 but was delayed. Shipments began in February.

Politis said the allegations are that the company knew the new drive would be delayed but said nothing to customers or investors.

"Meantime, it's alleged that there were large blocs of stock - 405,000 shares sold for $11.6 million in November 1997 - that were artificially inflated in price because the market didn't know the drive would be delayed," said Politis.

Iomega has also been criticized for its plans to spend $125 million this year on an advertising program, substantially more than last year's ad budget and a questionable use of resources at a time of flat earnings.

Politis said Iomega has been under competitive pressure from Sy-Quest, a Silicon Valley firm that is offering a 230-megabyte competing product that is priced similarly to Iomega's Zip drive and disc.

The company also has been involved in lawsuits with the French firm Nomai, which also operates in Silicon Valley. It is believed that Nomai has the ability to replicate the Zip drive media, and Iomega has sued the company.

"Some say Iomega should just let them make the media and not waste time suing Nomai," said Politis. "Others say no, Iomega's strategy has been to create razors - the Zip drive - and sell the blades - the Zip discs - so they should continue to fight Nomai."

Iomega stock was down about 4 percent, or 31 1/4 cents, at $7.06 1/4 in early trading Wednesday.

Howard Rosencrans, an analyst with HD Brous & Co. on Long Island, said Edwards' resignation was a surprise, but it is not clear whether he was forced out.

"I think that a change at this time might have been appropriate," Rosencrans said Wednesday. "I think they're in a transition phase right now, and I don't know, maybe they felt it was best that somebody else take over the helm."

Dunn said he "very much regrets" Edwards' departure, crediting him with Iomega's growth from $141 million in annual sales before his tenure to $1.7 billion last year.

"Kim transformed a static, relatively small company with mature products (the Bernoulli drive) that was suffering losses into a dynamic growth company."