By Katie Hoffmann
Jan. 14 (Bloomberg) -- Seagate Technology, the biggest maker of hard-disk drives, said it will cut 6 percent of its global workforce as profit falls in the global recession.
The company will eliminate 2,950 positions, which includes the about 800 U.S. job cuts announced this week, according to a regulatory filing today. Seagate said it will reduce its chief executive officer’s salary by 25 percent and also cut some other managers’ pay.
Profit at Seagate, which replaced its CEO two days ago, has slid for two quarters as the recession crimps personal-computer demand, causing orders for storage products to sag. Competitor Western Digital Corp. said last month it would cut 5 percent of its workforce. Seagate has higher operating costs as a percentage of revenue than Western Digital so it may have to make more cuts, said Robert W. Baird & Co. analyst Jayson Noland.
“They’re arguably less efficient,” said San Francisco- based Noland, who has a “neutral” rating on Seagate shares and doesn’t own any. “I wouldn’t be shocked to see another cut, just given the uncertainty at Seagate right now.”
Seagate estimates the job cuts will save it $130 million a year, and the lower salaries will reduce costs by $80 million.
Seagate, based in George Town, Grand Cayman, fell 30 cents, or 6.6 percent, to $4.28 at 9:52 a.m. in Nasdaq Stock Market trading. It fell 83 percent last year.
The company this week named Chairman Stephen Luczo as CEO, replacing William Watkins. The change gave Luczo back the reins of a company he ran for six years, from 1998 to 2004.
Seagate, operated from Scotts Valley, California, had 54,000 employees at the end of June.
To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net
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