Imation Reports Net Loss, Plans to Restructure
Imation Corp., reporting a third-quarter net loss on lower revenue, on Thursday said it would slash as much as 15% of its work force and take a $200-million charge in the current quarter to restructure its operations.
The company, which manufactures data storage and imaging devices, recorded a net loss of $38.7 million, or 97 cents a share, in the third quarter, contrasted with net income of $41.7 million, or $1.05 a share, a year ago.
Revenue declined to $529.5 million from $559.3 million, hurt by lower prices and the effects of the strong dollar, the company said.
The results included a $41.7- million charge for the write-off of in-process research and development from the company’s acquisition of Cemax-Icon.
“We are disappointed with our results in the quarter and year-to-date,” Chairman Bill Monahan said in a statement. “Weakness in our low-end tape storage market, a slowdown in Europe and the strength of the dollar continued to hurt us.”
As a result, he said, Oakdale, Minn.-based Imation will restructure its global operations to improve profitability, cutting between 1,000 and 1,500 jobs out of a total of 9,900.
Imation shares rose 31 cents to close at $22 on the New York Stock Exchange.
The year-ago results included $76.4 million in charges taken in connection with the company’s spinoff from 3M.
The company said most of the job cuts would occur outside Imation’s home area of Minneapolis-St. Paul, a spokesman said.
Imation has plants in California, Oklahoma, West Virginia, North Dakota, Arizona, Italy, the Netherlands and other locations. The job cuts are expected to be completed by mid-1998.
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WorldCom Inc. posted a third-quarter profit that beat expectations, contrasted with a year-ago loss, as traffic on its phone network increased at a fast clip.
WorldCom also said it is involved in “ongoing, substantive talks” with MCI Communications Corp. and British Telecommunications, MCI’s largest shareholder. WorldCom has offered to buy MCI for $29.38 billion. GTE Corp. has offered to buy MCI for $40 a share in cash.
WorldCom, the nation’s No. 4 long-distance phone company, said net income was $106 million, or 12 cents a share, contrasted with a pro forma loss of $60 million, or 7 cents, a year earlier, primarily from WorldCom’s acquisition of MFS Communications Co., which was completed Dec. 31.
Per-share earnings exceeded by a penny the 11-cent average estimate of analysts.
Separately, British Telecom said it lost $61 million in the fiscal second quarter because of a “windfall” tax imposed by the new Labor government in Britain. BT also said it was hard to predict whether its agreed takeover of MCI Communications Corp. can succeed.
The loss for the three months ending Sept. 30 contrasted with a profit of $750 million a year earlier.
At a Glance:
Republic Industries Inc. said third-quarter earnings nearly tripled, topping analysts’ estimates, as strong performances in its auto rental and waste-management businesses offset losses from the start up of its used-car AutoNation USA superstores. Profit from continuing operations rose to $124.4 million, or 28 cents a share, from $43 million, or 12 cents, a year earlier. It was expected to earn 25 cents a share.
Boston Chicken Inc. reported a drop in earnings and announced a proposed restructuring to buy back its franchised stores. The firm reported third-quarter earnings of $11 million, or 16 cents a share, down from $17.3 million, or 26 cents, a year ago. Boston Chicken, which grew into a 1,159-outlet chain by farming out shops to area developers, also said its board recommended restructuring into a 100% company-owned system, which would result in a net loss for 1998 and significant charges.
K-III Communications Corp. said its third-quarter loss widened on a charge related mostly to the pending sale of its Daily Racing Form publication. The company said its loss grew to $147.7 million, or $1.24 a share, from $11.9 million, or 19 cents, a year earlier. It also announced it was changing its name to Primedia Inc.
