With revenues dipping 35 per cent in quarter one of financial year 2023 and demand for falling too, Seagate Technology has decided to undergo restructuring. As part of the exercise, the manufacturer of hard drives will let go about 3,000 people. That means, about eight per cent of the data storage company’s workforce will be slashed.
The decision to downsize is based on the uncertain economic conditions prevalent across the globe and the fall in demand. The Company’s shares have also fallen from about $117 early this year to about $53 now.
Amongst the factors that have led to the poor financial performance of the Company are the Russia-Ukraine war, supply chain problems, inflation as well as the economic slowdown in China.
The layoff move is expected to help Seagate achieve profitability in the longer term. The Company also plans to alter its production output and yearly capital expenditure with a focus on saving costs and working towards growth.
However, before starting to see profits and beginning to save about $110 million annually, the Company will have to shell out at least about $60 million in pre-tax charges in terms of severance packages and benefits following this round of layoffs.
The Company hopes its revenue will recover to at least $1.85 billion and earnings per share will touch 15 cents by December. The figures for the previous year were $3.12 billion in revenues and earnings per share of $2.23 per share.