Seagate Expands Job Cuts to 6,500 as PC-Component Market Suffersby
Seagate Technology Plc, a maker of disk drives for computer storage, expanded plans to cut jobs to 14 percent of the workforce, seeking to reduce costs to weather a prolonged slump in demand.
The company will eliminate about 6,500 positions by the end of fiscal 2017, according to a statement. Cupertino, California-based Seagate had previously indicated workforce cuts of about 3 percent, or 1,600 jobs, and the stock rallied as much as 13 percent on news of the broader restructuring. The moves will result in pretax charges of about $164 million next year.
Component makers are suffering through a fifth consecutive annual decline in personal-computer shipments. The magnetic spinning-disk technology that Seagate uses in its hard drives is also facing competition from semiconductor-based storage products that the company doesn’t have.
The shares rose as high as $27.20 in extended trading following the statement. They had closed little changed at $24.09 in regular New York trading.
Separately, the company said preliminary sales for the quarter ended July 1 were $2.65 billion, exceeding an earlier prediction of $2.3 billion and analysts’ average estimate of $2.34 billion, according to data compiled by Bloomberg.