January 13, 2009
Seagate Replaces Top Two Executives, Plans To Cut Workforce
Seagate Technology replaced its top two executives on Monday and announced more changes were to come.
The No. 1 hard-disk drive maker also plans to cut around 10 percent of its US workforce, representatives of the Scotts Valley-based company told reporters last week at the Consumer Electronics Show in Las Vegas.The company announced that Chief Executive William Watkins would be replaced with the company's chairman, Stephen Luczo, who previously served as CEO from 1998 until Watkins took the position in mid-2004.
Seagate shares dropped 88 cents to close at $4.76 on Monday following the announcement. The stock has lost 78% of its value over the last year.
Luczo and Watkins will "confer over the next week to determine what role, if any," Watkins will play in the future, according to a company statement.
"Steve's significant understanding of Seagate's business and technology, and the customer and employee relationships that he built over his 15-year career at Seagate make Steve the ideal person to lead our company at this time," said Lydia M. Marshall, the board's lead director.
Dave Wickersham, president and chief operating officer, will be replaced by Robert Whitmore, Seagate's executive vice president and chief technology officer.
Additionally, the company announced it plans to cut 10 percent of its 8,000 U.S.-based workers.
Seagate cited oversupply and sluggish demand for PCs and other related products in its decision.
Intel Corp., the world's biggest microprocessor maker, also lowered its fourth-quarter revenue expectations twice. Fourth-quarter reports are expected on Thursday.
"Unfortunately, when you have an economic downturn coupled with slowing demand, it's a combination that weakens the industry," DisplaySearch analyst Chris Crotty said at CES last week.
Seagate owns 30 percent of the global hard-disk drive market. It has about 53,000 workers worldwide.
"We read this development as not only reflecting disappointment with recent results, but to also reflect a likely massive restructuring at the company," said Shebly Seyrafi, an analyst with Calyon Securities. He also told CNN that he expects Seagate to announce another round of job cuts that could result in as much as 20% of the company being laid off.
The company will report fiscal second quarter financial results on Wednesday, January 21, 2009 after the close of the market.
Image Caption: Seagate Technology headquarters in Scotts Valley. Courtesy Wikipedia
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