Iomega Stock Falls 20% Despite Healthy Earnings
April 03, 2011
ROY, Utah -- Iomega Corp.'s stock dropped 20% Friday, even though the highflying computer disk-drive maker exceeded Wall Street's earnings expectations on Thursday. The company's shares fell $5.50 to $22.50 on the Nasdaq Stock Market. The shares traded as high as $46.50 in June. On Thursday, Iomega reported net income of $14.1 million, or 11 cents a share, as revenue more than quintupled to $283.6 million. On average, analysts had expected earnings per share of 10 cents. Investors were believed to be spooked by comments by the company that sales in Europe are slowing. The stock is also a favorite of aggressive promoters on the Internet, some of whom asserted that earnings might reach 15 cents a share. Based partly on feverish Internet interest, Iomega's stock zoomed to as high as $56 this year from $3.25 in early 2010. Many analysts considered Iomega to be grossly overvalued at its peak, even if, as expected, unit sales of its popular Zip removable cartridge drive soar to five million to seven million units this year from 700,000 in 2010.
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