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TECHNOLOGY

Iomega Chief Quits; Latest Setback for Drive Maker

March 26, 1998|From Bloomberg News

Iomega Corp. said Wednesday that Chief Executive and President Kim Edwards has resigned, raising another hurdle for the struggling maker of high-capacity computer disk drives.

Edwards' departure came less than two weeks after the once-high-flying company said it expected a loss of $10 million to $25 million in the first quarter because of weak sales and high marketing costs.

Iomega said board member James Sierk will take over as interim CEO and president until a replacement is found for Edwards, who was at the helm when Iomega's shares rose more than twentyfold in 12 months during 1995 and '96 as sales surged.

Now Iomega's sales are slowing, forcing it to cut costs to remain competitive. Rivals such as SyQuest Technology Inc. offer higher-capacity drives and are luring buyers who once would have chosen Iomega's popular Zip and Jaz drives.

"Iomega's day in the sun has come and gone," said Rick Berry, an analyst at Argent Securities in Atlanta, who rates Iomega a "sell." "Edwards took Iomega from obscurity to dominance in its industry, but they're a one-product company."

Iomega shares fell 38 cents to close at $7 on the New York Stock Exchange after the announcement was made. The shares have fallen by more than half since December.

Iomega spokeswoman Willow Baum said it was a mutual decision between the board and Edwards for him to leave. Edwards wasn't immediately available to comment.

Iomega was a darling of investors in 1995 and '96, when computer users snapped up its disks and drives to store graphics and other large data files, many of them downloaded from the Internet. Iomega became a hot topic among small investors in Internet chat groups, who helped drive the stock from less than $2 in May 1995 to its record high of $27.56 on May 24, 1996.

The Roy, Utah-based company said it will look for a new CEO immediately. Sierk, 59, does not want the permanent position.

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