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Imation Posts Lower Q1 Sales, Net Loss

Oakdale, Minn. – Imation reported a 13.5 percent drop in sales and a deeper net loss in the first quarter ended March 31.
Net revenue in the quarter was $316.5 million, down 13.5 percent from $365.8 million year on year. The new loss was $7.2 million in the quarter compared with a net loss of $2.6 million in the prior year’s first quarter.

There was an operating loss of $3.4 million compared with an operating profit of $200,000 in the prior year.

From a product perspective, traditional storage revenue decreased 15.4 percent, emerging storage revenue decreased 8.3 percent, and electronics and accessories revenue decreased 8.5 percent. From a regional perspective, Americas revenue decreased 11.5 percent.

Imation president/CEO Mark Lucas commented: “We continue to make progress on our previously outlined strategy to transform Imation into a global technology company focused on profitable growth opportunities in data storage, protection and connectivity.’

He added, “We are also implementing our new strategic tape partnership with TDK, which we announced in January, to collaborate on the development and manufacturing of high-capacity magnetic tape. We have successfully discontinued Imation tape manufacturing at our Weatherford, Okla., site while smoothly scaling up production at TDK’s Japan location. While the Japanese earthquake and tsunami created temporary local business disruptions, the TDK tape manufacturing operations were unaffected and our tape supply remains strong.”

And Lucas noted that Imation is seeing “significant raw material price increases for products sourced in Asia,” especially affecting petroleum-based products such as optical media. “Therefore we expect increasing pressure on margins in our optical business. Imation has already initiated price increases and will continue to evaluate and take additional actions as necessary to attempt to mitigate the situation.”