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Iomega sees flat sales, marketing causing loss

Martin Veitch ZDNet.co.uk

Published: 16 Mar 1998 16:53 GMT

Iomega was today staying tight-lipped after it confirmed that it expected to make a significant loss when it reports its first quarter a month today on Thursday, April 16. The company blamed flat sales and incremental marketing costs.

The storage drive maker said the numbers could be well north or south of a $10-25 million loss. However, any loss will surprise many financial analysts, for whom Iomega has become something of a charm since it bounced back from obscurity with several big-selling product lines in the last couple of years. The profits warning helps link a worrying trend which has seen Compaq and Intel make similar statements in the last few weeks.

"Our shipments this quarter in all regions are generally lower than we anticipated, particularly in our international aftermarket business," said Kim Edwards, Iomega president and CEO in a prepared statement.

"The shortfall in sales combined with over $20 million in incremental marketing expenses appear to be the main factors contributing to our expected loss. In addition, we expect Iomega's inventory levels to be up over fourth quarter which will increase our cash utilisation this quarter."

The firm declined to speak directly to ZDNet News.

However, a return to form could be around the corner. Iomega is expected to make a big noise to welcome its new Clik! tiny 40Mb storage devices for PDAs, digital cameras and other pocket-sized devices at the CeBIT show which begins Thursday. A press conference is planned for the opening day of the show, led by CEO Edwards.