Reuters News Story:
LOS ANGELES, May 30 (Reuter) - Iomega Corp, a maker of computer storage drives, said it expects sales of its Zip, Jaz and Ditto products to rise this year, but it warned it may have trouble meeting demand.
In a filing with the Securities and Exchange Commission, Iomega said sales of the three products accounted for $213 million in the first three months of the year or 96 percent of total sales for the quarter.
The company said production and sales have been hurt by component shortages, something that is expected to continue for the "foreseeable future." Iomega attributed the shortage to strong industry-wide demand for integrated circuits.
At the end of March, Iomega had a backlog of $146 million, up from $23.5 million a year ago. The company said it believes it will be able to fill all of the orders during the next six months unless the orders are rescheduled or cancelled.
Iomega's business has grown rapidly in the last year, with sales surging to $222 million in the first quarter of 1996 from $40 million a year ago.
The rapid growth has resulted in wide swings in its stock price and rumors on electronic bulletin boards which the company claimed have contained "false information."
In some cases, the information has contained quotes falsely attributed to Iomega executives, prompting the company to take the unusual step of warning investors that any information not coming from the company should not be relied upon.
Iomega did not provide specific profit forecasts in its prospectus but it said any sudden drop in sales would result in a "disproportionate decrease" in net income.
"As a result of these and other factors, it is likely that in some future period the company's operating results will be below the expectations of investors...," the company warned.
The company hopes the proceeds from its 5 million share offering, coupled with current funding sources will be enough to fund its operations through 1997, but it said it may need additional funds thereafter.
The company hopes to raise as much as $169 million through the proposed offering, assuming an over-allotment option is excerised.
The company said a key part of its strategy was to forge additional original equipment manufacturing (OEM) relationships, beyond the recently signed deals with Packard Bell and Acer Inc. (TW:2306) .
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