Seagate to cut 2,900 jobs

Hard drive manufacturer Seagate Technology LLC will lay off about 7 percent of its global workforce, or about 2,900 employees, under a restructuring plan announced Wednesday.

The Scotts Valley, California, company plans to reduce its operating costs by $150 million this year, said Stephen Luczo, chairman and chief executive officer. Part of those cuts will include staff reductions, he said.

Seagate got off to a difficult start in 2004, losing market share among notebook PC manufacturers and having to reduce hard drive prices to stay competitive with companies like Maxtor Corp. The situation was exacerbated by an oversupply of notebooks in the first quarter that also affected companies such as Hewlett-Packard Co. and Intel Corp.

HP said the problem had eased in its quarterly earnings conference call last month, but Seagate is still experiencing problems from that buildup in supply, Luczo said. The company expects its mobile hard drive market share to fall by 2 percent to 3 percent, and prices across all of its products are expected to decline 5 percent, he said.

The restructuring does not affect any one particular group at Seagate more than another, but it is not a 7 percent cut in each division, a Seagate spokesman said. Employees will be notified in the coming weeks, and the layoffs will occur over the balance of this year, he said.

Part of the 7 percent reduction includes employees who accepted early retirement packages, the spokesman said.

Seagate will take a $50 million charge in the second quarter to account for the restructuring, Luczo said. Other steps to reduce costs are under evaluation, he said.