January 16, 1998 in Nation/World

Disk Drive Maker Cuts 10,000 Jobs Seagate Technology Blames Intense Industry Price War

From Wire Reports
 

Seagate Technology Inc., the largest independent maker of computer disk drives, on Thursday said it is cutting 10,000 jobs, mostly in Asia, as it struggles against an intense industry price war.

The 10 percent reduction in Seagate’s global work force, including 1,350 U.S. jobs, comes after two quarters of falling sales amid a worldwide glut that has driven down prices of the company’s products.

“We don’t foresee any further reductions,” said spokeswoman Julie Still.

The job cuts were announced after stock markets closed. Seagate shares finished up 50 cents, or 2.6 percent, to $19.62-1/2, on the Nasdaq Stock Market.

Seagate last week warned that it would lose money in its fiscal second quarter as disk-drive prices continued to plummet and the company moved to slow production and cut costs.

Seagate previously announced it would set aside more than $300 million to pay for a restructuring of its 100,000-person work force.

Seagate, based in Scotts Valley, Calif., is closing two Southern California design centers, in San Jose and Moorpark, and consolidating their operations with offices in Longmont, Colo., and Oklahoma City.

The reductions also include 1,400 job cuts already announced in December with the closing of a disk drive manufacturing plant in Ireland.

Seagate sells 16 percent of its products in the Far East, where consumer demand for computer products has been hurt by the region’s economic crisis. U.S. high-tech companies such as Intel and Motorola already have reported damage from the turbulence there.

After expanding rapidly in the early 1990s, Seagate recently has suffered against the onslaught of competitors such as IBM and Fujitsu. In the recent six months, Seagate’s sales have plunged to $1.9 billion from $2.5 billion.

Seagate’s latest quarterly financial results are due out next Tuesday.


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