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Imation Mulls Options After More Dismal Financials

Imation Mulls Options After More Dismal Financials

It has struggled in the years since spinning off from 3M Company.

Losses continue to mount for embattled Oakdale-based Imation Corp., which said Tuesday it hired a financial advisor to explore options for its four businesses.
 
The data storage company lost $14.4 million in its final fiscal 2014 quarter, a year after posting a $19 million profit for the same period. On Tuesday, the company said sales for the quarter ending Dec. 31 fell 15 percent to $197 million. Its operating loss was $12.1 million, or 35 cents a share. Full-year sales also dipped more than 15 percent to $729.5 million, an operating loss of $104.1 million.
 
Imation said it has hired Houlihan Lokey as a financial adviser to explore options “to unlock embedded value” within its consumer storage and security solutions. The Star Tribune reported that though CEO Mark Lucas told analysts in a Tuesday morning conference call that he preferred not to sell the entire company, all options were on the table.
 
"Enhancing the independence of each business unit may allow each team to focus solely on its own growth and product development,” Lucas said. "As the board reviews the options available to us, the management team and the rest of the company remain singularly focused on executing our plans in each business, including introducing differentiated, higher-margin products, and appropriately investing in our business plan.”
 
The company has struggled as it has undergone a “multi-year process” to transform itself in the data storage business. Since spinning off from 3M Company in 1996, it has shed most of its original businesses and reduced its original workforce by more than 90 percent. In 2012, Twin Cities Business explored what was behind Imation’s now-years long struggles and its prospects for the future—including whether it’s time for the company to be sold, either in pieces or in its entirety.
 
Analysts expected woeful results for the quarter, but Imation still lost more than was forecast. Imation’s loss of 35 cents a share for the quarter exceeded the roughly 21 cents analysts expected, and the full-year loss of $2.74 was also much more than the $1.34 per share analysts predicted. By mid-morning Tuesday, shares of the company’s stock traded down more than 7 percent to $3.95—down more than a full dollar from a year ago.
 
The Star Tribune also reported that Spear Point Capital Fund announced that it has sued Imation’s board of directors over claims that they “breached their fiduciary duties by approving and accepting excessive compensation.” Writing in December on seekingalpha.com, Spear Point’s Rodney Bienvenu called for the resignation of two Imation board members, citing board compensation that is “completely out of line with the size and performance” of Imation. Since 2003, Bienvenu pointed out, 92 percent of Imation’s shareholder value disappeared, yet board members are paid more than 3M Company.