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October 31
Imation to Cut up to 1,500 Jobs, Take a Charge in Restructuring
Imation, Inc., facing continued erosion in the market for
its older-format data-storage products, disclosed plans for a corporate
restructuring that will require $200 million in charges. The Oakdale, Minn.,
company said its "streamlining" effort will include elimination
of as many as 1,500 jobs, or about 15% of its total work force. The bulk
of the charges wil be recorded in the fourth quarter. Imation had already
implemented a number of cost-cutting measures in advance of its mid-1996
spinoff from Minnesota Mining and Manufacturing Co. Imation is one of the
leading makers of 3 1/2-inch floppy deskettes, a high-tech product that
has been displaced from the high end of the data-storage market, and is
now nearly a commodity. The company's strategy calls for replacing those
declining low-margin products with what its calls its "growth porfolio"
of new offerings. Development costs for the new products are burdensom,
however, particularly when Imation's overall revenue is slipping. "There
are two questions" regarding Imation, said Prudential Securities Inc.
analyst B. Alex Henderson. "How fast the old products fall off, and
how fast the new ones come on."
Excerpt from The Wall Street Journal, October 31, 1997.