Zip drive maker Iomega is cutting 450 jobs or 10 per cent of its workforce as part of a bid to save $40 million in expenses next year.
Iomega will also close two factories in California in a restructuring effort that will cost $45 million.
The announcement came just 24 hours after the company began shipping its delayed Clik 40Mb PC Card Drive. The lateness is one of the reasons - along with sluggish sales of its Jaz and Zip drives - that the company will lose money in its current quarter. Analysts had been expecting the firm to break even during the period.
Joseph Besecker, analyst at Emerald Research, said: "This company is undergoing a transition which is still not clearly defined. So it's hard to have a great deal of confidence going forward."
The company is also losing its chief operating officer, Scott Flaig who is stepping down to pursue consulting and academic roles.
Iomega's technology is fast being challenged by recordable and writeable CD Roms (CD-RW) technology as well as the nascent DVD+RW standard. An announcement about when these technologies will be included in machines is expected during the forthcoming PC Expo in New York. Hewlett-Packard (HP), MCC-Verbatim, Philips, Ricoh, Sony and Yamaha say they plan to discuss a CD-RW and DVD+RW based data interchange roadmap.
Iomega also plans to use PC Expo to broaden its product line and will make an announcement concerning optical storage. There is speculation that it too could be climbing on the CD-RW bandwagon but the company would not divulge any information until Monday.
The company has never fulfilled expectations mainly because the removable storage market never took off, a fact that drove its main competitor, Syquest, out of business.
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