Seagate’s 3,000 employees set to lose jobs under the restructuring plan

Seagate Technology Holdings plc is set to lay off 3,000 employees, which is equivalent to eight percent of its workforce. The Cupertino, California-headquartered data storage company made the announcement of the job cuts during its quarterly earnings report this week.

Fox Business reported that with the news of the dismissals, Seagate Technology’s shares also plunged. The situation is being seen by industry observers as another indication of slow down in the sales of personal computers and cloud services.

The company explained at the meeting that the job terminations are part of its restructuring scheme. It also needs to be done to reduce costs amid the current economic conditions in the country.

“Global economic uncertainties and broad-based customer inventory corrections worsened in the latter stages of the September quarter, and these dynamics are reflected in both near-term industry demand and Seagate's financial performance,” Seagate’s chief executive officer, Dave Mosley, said in a press release for the company’s fiscal first quarter 2023 financial results.

The CEO added, “We have taken quick and decisive actions to respond to current market conditions and enhance long-term profitability, including adjusting our production output and annual capital expenditure plans, and announcing a restructuring plan that will deliver meaningful cost savings while maintaining investments in the mass capacity solutions driving our future growth.”

Moreover, Seagate shared that its aid restructuring plan that includes the job cuts will help the company save around $110 million per year. For the letting go of its employees, it already expects to pay some pretax charges of approximately $65 million. Most of the bills are for severance pay and other termination benefits.

The plans for restructuring were first announced by Seagate after it reported its fiscal first-quarter earnings that failed to reach Wall Street expectations for earnings and revenue per share. Its share price also dipped by more than seven percent during mid-week trading this week, and so far, they are down over 55% in 2022.

Meanwhile, Seagate was accused by the U.S. of breaking export rules by selling hard drives to Huawei Technologies. In its Securities and Exchange Commission filing, the company said it received a warning from the Commerce Department's Bureau of Industry and Security (BIS ), saying it may have breached export control laws by selling HD drives to a client on a BIS Entity list.

Seagate did not name the customer, but the Huawei brand surfaced in the issue and in response to the allegation, the company said it believes the hard disk drives are not subject to the U.S. export regulations and denied it has engaged in any illegal acts as alleged.

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