By Carmen Fleetwood
NEW YORK (Dow Jones)--Iomega Corp. (IOMG) shares were hurt by investors after the company made cautionary comments about the European market in its post-earnings conference call.
Late yesterday, Iomega reported second-quarter earnings of 11 cents a share, compared with a loss of 2 cents a year ago. A First Call Inc. survey of analysts had produced a mean estimate of 10 cents. Second-quarter revenues of $283.6 million were up a solid 28% from the previous quarter.
Iomega ''basically said the traditional summer slowdown'' was bigger and started earlier than expected in Europe, said an outside spokesman.
Other computer companies, such as Digital Equipment Corp. (DEC)., have also reported a slowdown in European sales.
Iomega seemed to be ''caught a little bit off guard'' by Europe, said J.P. Morgan Securities Inc. analyst Daniel Kunstler.
The impact of the remarks late yesterday about Europe was intensified because the company doesn't offer much guidance, said H.D. Brous & Co. analyst Howard Rosencrans. He added that the limited guidance is typical for the company.
Iomega's sales in the U.S. and Far East exceeded expectations, said Tom Gardner, one of the brothers who run the Motley Fool financial bulletin board and one of the earliest supporters of the stock.
Gardner graded the second quarter a B to B-plus, but ''a lot of people were hoping for an A.'' He added that fundamentally the company is sound.
Some traders said concern was raised because the summer slowdown appears to be more severe than in recent years, so there are some worries that Iomega's third-quarter European sales would be hurt as well. Iomega shares might also have been pressured because second-quarter earnings were close to Wall Street's estimates, and not well above. It was the first time Wall Street ''was more clued in as to where'' the earnings would be, Rosencrans said.
While such earnings are normally a positive sign, some traders believed they might be pressuring the stock because some analysts had been rather negative on the stock and provided estimates that were considerably under earnings.
A few investors cited the slowdown in the growth rate of the company's Zip drive, but others noted that it would have been impossible to keep up the heightened rate as Iomega probably shipped nearly the same amount of drives in the first quarter of 1996 as in all of 1995.
Iomega shares were off 4 3/4, or 17%, at 23 1/4, on Nasdaq volume of 13.4 million shares, compared with average daily volume of 10.8 million. The stock gained 7.2% yesterday.
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