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Posted 05 Aug 2001   For week ended July 27, 2001
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Sent on Mormon-News: 24Jul01

By Kent Larsen

Iomega Shocks Utah, Will Move to West Coast

ROY, UTAH -- Disk drive maker Iomega shocked its employees and the Northern Utah community of Roy that has been its home by announcing that it will move its headquarters to an undisclosed location on the West Coast. The announcement came last Thursday amid announcements of the company's performance during the last quarter and just one month after it hired a new President and CEO Werner Heid. News reports indicate that the company's Chairman, LDS Church member David Dunn, and Heid both live in San Diego, California.

Iomega Thursday released the results of its operations for the 2nd quarter of 2001, and those results continued a downward trend in sales. Sales were $184.1 million for the quarter, a drop of 39% since the same quarter last year and the 13th straight quarter of declining sales for the company. Overall, sales have declined 62% from their high of $501.3 million for the last quarter of 1997. The company also reported its first quarterly loss in two years.

Other announcements Thursday included plans to layoff 800 to 1,100 people, as much as one-third of the company's workforce, in addition to the headquarters move to the West Coast. The only piece of the company that would remain in Roy, Utah is its Research and Development division. Iomega previously announced (June 13th) that its manufacturing operations would already be consolidated in Malaysia. In addition, the company announced a reverse stock split under which shareholders would receive one share for every five they own.

On Friday, Iomega's stock dropped 14% on the combined announcements. Reaction from the state of Utah and the city of Roy, Utah expressed disappointment. "It's certainly a loss for the state, especially northern Utah," said Utah Information Technology Association CEO Richard Nelson. Roy city manager Blake Wahlen said, "Obviously, we are disappointed, mostly because we [will] have a lot of people out of jobs. I have several personal friends I am concerned for."

Company employees and investors wondered about the reasons for the move, with many speculating that the move comes because both Chairman Dunn and CEO Heid live in San Diego. Some argue that overhead costs will be higher on the west coast. Analyst Stan Corker with Emerald Research thinks corporate politics may be behind the move, "To me it seems a waste of money. This seems to be another activity that just forces changes in management."

But regardless of the reason, the move will hit Iomega's employees and the city hard. While some employees may move to the west coast, the economic impact will still be felt in the Mormon-dominated community, and will likely leave the company with fewer Mormon employees.

Iomega has struggled in recent years in spite of its dominant position in the removable storage market. Its woes are mostly due to reduced use of removable storage products, like the company's Zip Disk, due to the ease of transferring files over the Internet. While the company has tried to reposition its products for use in digital cameras and portable music players, those efforts have not been successful enough to reverse its declining sales and earnings.


Iomega Overhaul Baffles Utah
Salt Lake Tribune 21Jul01 B4
By Paul Beebe: Salt Lake Tribune
Job cuts, departure of company headquarters will hurt the state

Employees hear news of layoffs
Ogden UT Standard-Examiner 20Jul01 B4
By Vicky Campbell and Gary Hinds: Standard-Examiner staff
Iomega may idle about 550 workers in Top of Utah

Iomega moving offices
Ogden UT Standard-Examiner 20Jul01 B4
By Gary Hinds: Standard-Examiner staff
California site of new headquarters; up to 1,100 jobs will be cut worldwide

Iomega stock plummets after report
Ogden UT Standard-Examiner 21Jul01 B4
By Gary Hinds: Standard-Examiner staff
Analyst critical of company's plans to lay off 25% of work force


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