Investors stomped down shares of Imation Corp. by 6 percent Monday after the beleaguered tape, DVD and flash drive maker announced yet another restructuring. This one promises a $40 million charge and the loss of 200 jobs. Officials at the Oakdale-based manufacturer declined to specify where the layoffs will take place.
The cuts are part of a larger plan to aggressively reduce operating expenses by 10 percent by the end of 2009.
"We will also focus on reducing selling, general and administrative expenses by targeting our resources on key accounts and key products and simplifying our corporate structure globally," said CEO Frank Russomanno. He added that the company is committed to reinventing itself into a brand and product marketing company while maintaining its leadership in corporate data tape technology.
Imation makes tapes, CDs, DVDs, flash drives and other media recording equipment that sell under the names Imation, Memorex, Memcorp and TDK. It downgraded its outlook for the fourth quarter and 2008 annual results as a result of the restructuring charges.
The dimmer forecast resulted from the meltdown on Wall Street, which impaired some of Imation's largest data tape customers: Lehman Brothers, Merrill Lynch, AIG, Washington Mutual and Wachovia. Sales declines led to $16 million in third-quarter restructuring charges and a third-quarter operating loss of $8.7 million. That compared with a $16.3 million gain for the same period last year.
"The recent decline in our stock price and deterioration in economic conditions impacting our business outlook increases the possibility of asset impairments in 2008," Russomanno said.
Company officials said they expect $25 million of the $40 million in restructuring charges to hit the fourth quarter. They expect a fourth-quarter operating loss of $11 million to $18 million (a loss of 21 to 34 cents a share) on sales of $560 million to $580 million. Officials previously forecast healthy operating income of $7 million to $14 million (or 11 to 23 cents a share).
Full-year 2008 earnings are expected to be $5 million to $12 million (or 0 to 12 cents a share), including $46 million in combined restructuring charges. The previous forecast was for earnings of $30 million to $37 million (or 44 to 56 cents a share), including $21 million in restructuring charges for three quarters.
Imation's stock fell 65 cents to $12.12 per share in early trading Monday. The stock is far below its 52-week high of $27.63 per share.
Dee DePass • 612-673-7725
