Imation (IMN) expects second-quarter results below previous estimates, due mostly to charges related to soft demand of optical media products and the planned closing of one of its plants.
The company said after the bell Tuesday that it now anticipates net income from continuing operations of 19 to 21 cents a share on revenue of about $284 million.
A Thomson First Call consensus survey had expected the company to earn 51 cents a share. It wasn't immediately clear how the analysts' estimate and company's expectations reconciled, although Imation said the new expectations were below published analyst estimates.
The lower-than-expected results are due to competitive market pricing and softer than expected demand for recordable optical media that resulted in lower than expected revenue and gross margins, including about $9 million in charges associated with optical inventory valuation.
In addition, the company plans to phase out its Tucson, Ariz., manufacturing operations and an unrelated restructuring of selected international sales and administrative positions. Imation expects the actions to cost about $9 million, about $6 million of which is cash. The plant will operate through the end of 2005.
About $3.1 million of the charges, primarily associated with severance costs, will be recognized in the second quarter. The remainder of the estimated costs, for non- severance related items associated with the Tucson site, will be incurred over the next 18 months, as those actions occur. The restructuring will impact about 280 positions worldwide, most of which are in manufacturing operations. Imation currently employs about 2,800 people.
The company expects the restructuring actions to benefit earnings beginning in 2006.
Shares of Imation were recently down $1.22, or 3.03%, to $39.10 in after-hours trading after closing the regular session down 14 cents to $40.32.