Imation Corp. Eyes Its Alternatives

Along with its announcement that it would miss third quarter earnings and revenue estimates, data storage disk maker Imation Corp. said Oct. 5 it had hired Goldman, Sachs to help it look at strategic alternatives. Although the options mentioned were a financial restructuring, spin-offs, divestitures, and joint ventures, Imation’s CEO Bill Monohan reportedly did not deny the possibility of a sale for the company during the conference call. Imation stock closed at $15.88 on November 30 on the New York Stock Exchange near the low of a 52-week range of $14.81 to $34.25. Benjamin Reitzes, an analyst at PaineWebber, in a report following the announcement, said that a breakup of Imation was possible, and in fact prudent. “In our opinion the most viable option would be to first sell its color technologies business to a larger graphics arts company which could consolidate the operation and drive synergies. We estimated that business could be worth over $100 million,” he wrote. Imation also announced on October 6 that in the second half of 2000 the company would take charges and write-offs totaling $98 million. Revenues for the third quarter will be approximately 16% lower than last year’s earnings of $346 million, said Imation. Imation planned to release final earnings results on October 24.