Seagate axes 2,900 staff

In another sign of trouble in the disk drive industry, Seagate Technology plans to cut its annual operating costs by about $150m and axe 2,900 jobs.

The drive maker said industry-wide demand for drives going into "personal storage products" - primarily desktop PCs - is lower than expected for the June quarter. In addition, its market share for drives of notebook computers and other mobile devices could fall. Seagate said pricing in the mobile market has been more aggressive than its previous expectations.

In a conference call, Seagate executives said they plan to reduce the company's worldwide work force of 42,000 by approximately seven per cent - or about 2,900 employees. A Seagate representative said the layoffs will affect a variety of departments in the company. Some employees are taking voluntary retirement packages.

The disk drive industry, a notoriously difficult one in which to succeed, is stuck in a rut of cutthroat pricing and grim profit prospects, according to a recent report by investment firm Credit Suisse First Boston.

Seagate's cost-cutting plan will include a charge in the current quarter of about $50m. The company said its cost reduction actions "will not impact current product introductions and will be largely implemented by the end of the calendar year."

Ed Frauenheim writes for News.com