Imation Posts a Mixed Second Quarter

Posted on July 26, 2011 By Stuart J. Johnston

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Storage vendor Imation Corp. announced Tuesday an operating loss for its second fiscal quarter of 2011 of $9.3 million based on net revenues of $323 million -- a decline of 8.9 percent over the same quarter of 2010.

After special charges totaling $10.7 million, Imation (NYSE: IMN) posted diluted losses per share of $0.33, whereas, without those charges, operating income would have come in at $1.4 million with diluted losses per share of $0.05, according to a company statement.

Part of the company's loss for the quarter was attributable to margin pressures in Imation's optical media business related to price increases on products manufactured in Asia.

"The Company is actively pursuing supply chain alternatives and other actions. Additionally, we are implementing price increases but we expect optical cost and margin pressures will continue," Mark Lucas, president and CEO of Imation, said in the statement.

In June, the company also completed acquiring the assets of Montreal-based MSI Security, which specialized in high-security and privacy technologies.

"We remain committed to and are making steady progress in our strategic transformation to a global technology company," Lucas said.

Meanwhile, net revenue declines were fueled by seven percent price erosion as well as by volume declines of eight percent, although both were partially offset by foreign currency benefits of some six percent.

As far as its product profile goes, Imation said that revenue from its traditional storage products shrank by 10.4 percent in the quarter, while scalable and secure storage products grew by 13.3 percent. In the area of accessories and electronics, revenues also slid -- this time by 22 percent.

Imation spent $5 million on research and development in the second quarter of 2011, a gain of $1.1 million compared with $3.9 million in the year ago quarter.

The company finished the quarter, which ended June 30, with $257.8 million in cash and cash equivalents on hand, down $47.1 million from $304.9 million, which the company had in its coffers at the end of the last fiscal year on Dec. 31, 2010.

Stuart J. Johnston is a contributing editor at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.


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