Iomega Corp. earnings continued to slip in the second quarter, but the company continues to insist it will be profitable by the fourth quarter.
On Thursday, Iomega reported second-quarter revenue of $394 million, a decrease of 2 percent from its second-quarter 1997 revenue of $400 million. The company's net loss for the second quarter, before special charges, was $33.8 million or 13 cents per diluted share."It was a tough retail quarter, which hit our Jaz business particularly hard," said James E. Sierk, president and chief executive officer. "Our Zip business, however, had the best quarter in its history in terms of disk sales. We also passed a major milestone at the end of June by shipping our 15 millionth Zip drive."
Also in the second quarter, Iomega recorded special pretax charges of $9.4 million, or 2 cents per diluted share after tax, related to its cost reduction efforts. The total after-tax loss for the second quarter, including these charges, was $39.9 million, or 15 cents per diluted share.
For the first six months of 1998, Iomega's revenue totaled $801 million vs. $762 million for the first six months of 1997, an increase of 5 percent. Iomega's net loss for the first six months of 1988, including second-quarter special charges, totaled $58.5 million, or 22 cents per diluted share, vs. net income of $49.2 million, or 18 cents per diluted share, for the same period in 1997.
By product category, Iomega's Zip sales were $284 million in the second quarter, an increase of 10 percent over the second quarter in 1997. Zip drive shipments increased 35 percent and Zip disk unit shipments increased 44 percent over second quarter 1997. Jaz drive revenues decreased 23 percent to $87 million from $113 million in the second quarter of 1997. Revenue on Iomega's Ditto drives decreased 28 percent to $21 million from the second quarter of 1997.
Geographically, Iomega's business in the Americas was up 4 percent from second-quarter 1997 to $258 million. Revenue was lower than anticipated in the U.S. market due to slower than expected Jaz sales. Compared with second-quarter 1997, Iomega's European sales were down 13 percent to $93 million. Sales in the Asia/Pacific region were down 4 percent to $43 million.
Novell expects to generate positive cash flow for the second half of the year before acquisition costs for Nomai, the company's French competitor. Iomega bought majority interest in Nomai S.A. earlier this month.
Sierk also announced Iomega has in place an amended $150 million senior secured credit facility with a syndicate of 12 banks led by J.P. Morgan and Citicorp. "We feel this bank line, combined with the early progress we have made in improvement asset management, will provide the liquidity we need to capitalize on our market opportunities."