Iomega to Cut Up to 14% of Its Work Force

Iomega Corp. said it plans to cut 600 to 700 jobs, or as much as 14% of its work force, and forecast a wider-than-expected loss for the second quarter.

Iomega, which makes the Zip and Jaz portable computer disk drives, said it will take a pretax charge of $5 million to $10 million for the job cuts. Excluding the charge, it expects a quarterly loss of $25 million to $35 million, or 10 cents to 13 cents a share. The average estimate from six analysts surveyed by IBES International was a loss of 2 cents a share.

The company said revenue will be little changed from the first quarter’s $408 million, as aftermarket sales were lower than expected and more sales went to equipment manufacturers, which have narrower profit margins. Iomega expects the job reductions and other measures to save more than $50 million in the second half of the year.

The company said it expects a profitable fourth quarter but will post a loss for the full year.

The job cuts “will make us permanently competitive,” said Chief Executive James Sierk.

Sierk took over as interim CEO and president in March after Kim Edwards resigned amid pressure from the board to improve results at the struggling drive maker amid increased competition and slowing demand for personal computers.

Iomega also said its expected loss for the quarter could result in noncompliance with some covenants under its $200-million senior credit facility.

Iomega announced the cuts after the close of trading. Iomega shares fell 6 cents to close at $6.31 on the New York Stock Exchange.