Scotts Valley, CA – Seagate Technology has announced a restructuring plan that includes a reduction of approximately 1100 employees or 2.5% of the company’s workforce.
The company says the cuts are required to meet a target of product development, marketing and administrative costs of less than $300 million per quarter and to position the company to be cash flow and earnings positive within its fiscal year 2010.
The restructuring plan, which the company expects to be complete by the end of July, is expected to result in restructuring charges of around $72 million. These charges will primarily be incurred in the June 2009 quarter and consist mainly of employee termination costs which are expected to be paid in the September 2009 quarter. The annual savings are expected to be in the region of $125 million.
Since the beginning of FY 2009, the company has reduced its global headcount through attrition and restructuring, resulting in a 25 percent reduction in the company’s labor costs. Seagate earlier announced the closure of two recording media facilities and its Pittsburgh research facility, company-wide salary reductions and other cost reduction initiatives.
The company says it isn’t ruling out further cost reduction actions.