Iomega warns on profits, revenues

SAN FRANCISCO: Computer memory drive maker Iomega Corporation warned on Friday that quarterly revenue and earnings would fall far short of targets due to slow sales of its signature Zip drives and disks and higher advertising costs. Revenues for the fourth quarter ended December 31 would be $325-330 million against $434 million a year earlier, the Roy, Utah-based company said in a statement.

Treasurer Tracy Welch said diluted net earnings per share, excluding a tax benefit, would be two to four cents. Analysts on average had expected Iomega to post per-share earnings of 11 cents, according to First Call/Thomson Financial. A host of technology firms preceded Iomega with warnings, especially about the weakness of demand for personal computers.

"We are taking steps to control costs to adjust to changing market conditions and expect to remain profitable," President and Chief Executive Bruce Albertson said in a statement. Including a 5-cent-per-share tax benefit, Iomega said earnings per share would be seven to nine cents.

Iomega, best known for its 100-and 250-megabyte Zip disks and drives which can replace much smaller capacity 3.5 inch floppy disks, is scheduled to announce fourth-quarter results on January 18.

Iomega also announced a higher capacity multi-gigabyte "Peerless" drive system which it will begin shipping mid-year. The disks, about the size of personal digital assistants, will come in five, 10 and 20-gigabyte sizes costing $129-$199 each, it said.

Iomega shares gained 19 cents, or 4.9 percent, before the warning to close at $4.05 on the New York Stock Exchange, where technology stocks in general declined.

(C) Reuters Limited 2001.