The Utah-based manufacturer of portable data storage devices, including the Zip drive, said it has notified employees of the cuts, which will reduce the company's workforce by about 1,250 employees from 3,300 to 2,050. Iomega said that it is taking these steps to keep its costs in line with revenue and to improve its cash flow.
"We have taken some very difficult but necessary steps to adjust the company's operating and cost structure to our expected revenue levels," said Werner Heid, Iomega president and chief executive. "Our goal in the short term is to significantly lower the break-even point of this business, stop the revenue decline and improve operational efficiencies."
The company said it will take a charge of $55m to $65m in the third quarter, including about $43m in expected cash charges that apply to severance-related expenses, lease terminations, contractual obligations and other cash expenses.
The company will cut approximately 780 jobs in North America, 90 jobs in Europe and 380 jobs in the Asia-Pacific region. The company also said that it plans to reduce the number of leased facilities in those areas.