World’s largest hard drive manufacturer lays off 3,000 employees
Due to the economic crisis, hard drive manufacturer Seagate is laying off 3,000 employees. In addition, the group sold products to a sanctioned company in violation of US export regulations.
“Global economic uncertainties” are the reason for the layoff of 3,000 employees, according to Seagate CEO Dave Mosley. The news agency reports Bloomberg.
Seagate is the world’s largest manufacturer of computer hard drives. But at the moment there are no large orders. According to the company, this is due to concerns about the deteriorating economy.
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Seagate Saves $110M Through Layoffs
Mosley reports that quick and decisive action has been taken to respond to current market conditions. As a result, Seagate has decided to cut 3,000 employees to improve long-term profitability.
The job cuts would account for about 7.5 percent of the total workforce and result in annual savings of about $110 million.
The company also wants to adjust production output and annual investment plans. Thus, expenditures in the current quarter are expected to fall again by around ten million US dollars.
Financial results missed analyst expectations
The fact that the economic position of the company has deteriorated is shown above all by the financial results for the first quarter. Revenue as of September 30, 2022 was $2.04 billion. However, the average analyst estimate was $2.2 billion.
In addition, the hard drive producer expects the quarter with the weakest sales since 2005. The tech group expects sales of only around 1.85 billion US dollars.
Seagate’s shares also fell more than 10 percent at the start of trading in New York. They lost more than half of their value this year.
Seagate allegedly violates US sanctions
But Seagate’s difficulties aren’t just financial. The US Department of Commerce also accuses the company of violating US export regulations.
The hardware manufacturer sold hard drives to Huawei Technologies Co. However, the then US President Donald Trump had in May 2019 sanctions imposed on the Chinese IT group. The company denies the allegation.
Seagate maintains that it has not engaged in any prohibited activity as alleged by the Bureau of Industry and Security because, among other things, Seagate hard drives are not subject to the Export Administration Regulations.
Seagate isn’t the only tech company in crisis
The falling demand for computer components, the effects of the corona pandemic and the economic weakness in China are also driving other producers into a corner. According to Seagate, inflation is also dampening spending.
Intel is also reportedly planning to cut thousands of jobs for similar reasons. In addition, Meta wants to reorganize its teams and reduce staff. Amazon and Alphabet are also planning to cut employee costs.
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