Seagate Technology said that it plans to cut about 1,100 jobs from its workforce in a move the computer storage maker expects will reduce costs by about $125 million a year.
The job-cutting move, which affects about 2.5 percent of Seagate's workforce, is aimed at helping the company stay on track toward being cash-flow and earnings positive within its fiscal year 2010. It builds on a 10-percent reduction in jobs announced in January.
As a result of the new plan, Seagate, which competes with storage company Western Digital Corp, expects to take restructuring charges of about $72 million, primarily in the quarter ending in June.
Analysts said Seagate needs to make additional cost cuts like this, which may help it address debt obligations.
"The move will help the company avoid tripping its net leverage ratio debt covenant that was already renegotiated earlier this year," said JP Morgan analyst Mark Moskowitz, in a note to clients. "Seagate shares still face hurdles that could test investors' resolve in the slower summer months."
Seagate has been no stranger to restructuring in recent months as it deals with slow sales in the personal computer industry, which most others has seen demand shrink during the global economic downturn.
Back in December it said it would halt some operations during the holiday season and cut some 5 percent of its workforce.
About one month ago, on the same day that it reported disappointing quarterly gross margins, it eliminated its dividend.
The elimination of the quarterly dividend is expected to trim costs by about $60 million annually, the company said.
In January it replaced Chief Executive Bill Watkins, and Chief Operating Officer David Wickersham resigned. Chairman Stephen Luczo, who relinquished the CEO role to Watkins in 2004, has returned to the position.
Agencies
Showing posts with label Western Digital Corp. Show all posts
Showing posts with label Western Digital Corp. Show all posts
Monday, May 18, 2009
Thursday, October 30, 2008
Tech results show resilience, future more gloomy
Microsoft Corp and a diverse group of technology companies met or beat Wall Street earnings targets, but uncertain outlooks undermined a short burst of enthusiasm from investors.
Microsoft itself initially gave investors some relief by dropping its forecast less than feared, but an after-hours rally in its shares fizzled.
"Even where earnings outperform expectations, there is still not a lot of good guidance going forward," said Diane Swonk, chief economist for Mesirow Financial. "It's very hard to give guidance, even if you have done well. It's very hard to know where the world is going."
Shares of Microsoft, whose products range from the Windows operating system to the Xbox video game system, were flat in extended trade after closing at $22.32.
"The company continues to set reasonable expectations and meet or beat them as they did here," said David Katz, chief investment officer of Matrix Asset Advisors. "The expectation was that they would bring down guidance, they only did that in a modest way. They seem to have a grasp on all their business."
Technology firms over the past few weeks have repeatedly complained of poor visibility into the December quarter and beyond, and worries about the global economy have prompted many to issue cautious forecasts.
Ingram Micro Inc, the world's biggest computer hardware distributor, elected to end its practice of issuing guidance altogether, citing the "unpredictability" of global markets. It reported quarterly sales declines in Europe and Asia, indicating that economic pain is spreading across the globe.
That report, combined with the forecast from Microsoft, are signs that technology spending will not hold up next year, said Fred Hickey, editor of the High-Tech Strategist Newsletter, a publication widely read by investors.
"The weakness has spread everywhere. All the regions are affected," he said. "They did not give much hope going forward. It's going to be a rough year."
Ingram shares were flat in extended trading after closing at $12.18. They've dropped 28 percent over the past month.
Flextronics International Ltd , the world's biggest contract manufacturer, reported adjusted results that met analysts' forecasts. Its shares added 4 percent after closing at $3.74, though they've lost half their value over the past month.
Hilliard Lyons analyst Thomas Carpenter said Flextronics' results were likely better than people were looking for, but said the future did not look promising. "There was a little bit of slowing in the quarter, mostly toward the end, and things are slowing further in this quarter. I think this is going to be a multi-quarter slowdown as we unwind the credit crunch."
More signs of slowing came from Juniper Networks Inc, which reported higher earnings and revenue but issued a cautious outlook, sending its shares down 5 percent from its close of $17.83. "A disaster scenario is already priced into the stock market. The uncertainty is where the fly in the ointment is," Swonk said.
Western Digital Corp, the world's second-largest maker of hard disk drives, said its net profit more than tripled, while revenue edged past analysts' average forecast. The company's shares were unchanged in after-hours trading after closing at $13.05.
Microsoft itself initially gave investors some relief by dropping its forecast less than feared, but an after-hours rally in its shares fizzled.
"Even where earnings outperform expectations, there is still not a lot of good guidance going forward," said Diane Swonk, chief economist for Mesirow Financial. "It's very hard to give guidance, even if you have done well. It's very hard to know where the world is going."
Shares of Microsoft, whose products range from the Windows operating system to the Xbox video game system, were flat in extended trade after closing at $22.32.
"The company continues to set reasonable expectations and meet or beat them as they did here," said David Katz, chief investment officer of Matrix Asset Advisors. "The expectation was that they would bring down guidance, they only did that in a modest way. They seem to have a grasp on all their business."
Technology firms over the past few weeks have repeatedly complained of poor visibility into the December quarter and beyond, and worries about the global economy have prompted many to issue cautious forecasts.
Ingram Micro Inc, the world's biggest computer hardware distributor, elected to end its practice of issuing guidance altogether, citing the "unpredictability" of global markets. It reported quarterly sales declines in Europe and Asia, indicating that economic pain is spreading across the globe.
That report, combined with the forecast from Microsoft, are signs that technology spending will not hold up next year, said Fred Hickey, editor of the High-Tech Strategist Newsletter, a publication widely read by investors.
"The weakness has spread everywhere. All the regions are affected," he said. "They did not give much hope going forward. It's going to be a rough year."
Ingram shares were flat in extended trading after closing at $12.18. They've dropped 28 percent over the past month.
Flextronics International Ltd , the world's biggest contract manufacturer, reported adjusted results that met analysts' forecasts. Its shares added 4 percent after closing at $3.74, though they've lost half their value over the past month.
Hilliard Lyons analyst Thomas Carpenter said Flextronics' results were likely better than people were looking for, but said the future did not look promising. "There was a little bit of slowing in the quarter, mostly toward the end, and things are slowing further in this quarter. I think this is going to be a multi-quarter slowdown as we unwind the credit crunch."
More signs of slowing came from Juniper Networks Inc, which reported higher earnings and revenue but issued a cautious outlook, sending its shares down 5 percent from its close of $17.83. "A disaster scenario is already priced into the stock market. The uncertainty is where the fly in the ointment is," Swonk said.
Western Digital Corp, the world's second-largest maker of hard disk drives, said its net profit more than tripled, while revenue edged past analysts' average forecast. The company's shares were unchanged in after-hours trading after closing at $13.05.
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