Rimage lowers 2Q guidance, begins cutting costs

Rimage Corp., which makes recordable CD and DVD publishing systems, reduced its second-quarter guidance on Monday and said it began a cost-cutting initiative as spending by its distribution partners has slowed.

Rimage now expects second-quarter earnings of 9 cents to 12 cents per share on revenue of $20 million to $22 million. The company previously predicted earnings of 22 cents to 27 cents per share on revenue of $24 million to $26 million.

Rimage said sales of its disc publishing hardware are not meeting forecasts because its distribution partners have been more cautious about purchasing decisions due to the uncertain economic environment.

The company said this has translated into longer selling cycles over the past few months and its sales mix has shifted toward lower-margin products other than equipment.

Rimage said it has started to reduce expenses totaling about $2 million on an annualized basis. The company said the full impact of the cost reductions will begin to be realized in the third quarter.

"In our first quarter earnings release, we indicated that uncertain economic conditions had adversely affected our operating results for that period," said President and Chief Executive Bernard P. Aldrich. "Caution on the part of our customers has increased since that time."

Aldrich said the company's longer-term prospects remain positive, noting that Rimage is moving forward with product development initiatives.

Shares of Rimage were unchanged in premarket trading Monday from Friday's close of $17.33.