Iomega is to lay off 38 per cent of its employees worldwide and terminate leases and other contractual agreements in a restructuring move that also includes taking a charge of $55 million to $65 million in the third quarter (around £42 million).
The US-based manufacturer of portable data storage, 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 it's 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 CEO, in a statement. "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 $55 million to $65 million, including about $43 million 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 it plans to reduce the number of leased facilities in those areas.