Western Digital Selling Irish Plant to N.Y. Firm

Financially struggling Western Digital Corp. is selling a manufacturing plant in Ireland to a New York electronics company, a move that will result in 240 layoffs.

Western Digital, a maker of computer components, said Friday that it has agreed to sell the plant in Cork, Ireland, for an undisclosed sum to Dover Electronics. The New York company plans to retain about 100 of the plant’s 340 workers, but the rest will be dismissed, Western Digital officials said.

The sale was prompted by two factors. The plant, which assembled circuit boards for the company’s network products line, was dispensable after Western Digital sold the network unit for $33 million last month, said Robert J. Blair, a company spokesman.

Western Digital has also changed its business focus from the manufacture of circuit boards used in PCs to the manufacture of semiconductor chips.

Blair said the purchase price was immaterial; analysts estimated it at less than $5 million.

He said that the company factored costs related to the sale, such as severance pay for employees, in the purchase price of the network-products division. As a result, he said, no write-off will be recorded.

The deal, subject to approval by Irish authorities and directors of both companies, is expected to close by year’s end.

On Thursday, Western Digital reported a first-quarter loss of $37.9 million. The company said it is struggling because of the recession, a computer industry slump and severe price-cutting. The company also restructured $205.8 million in debt, giving it breathing room from stiff debt payments until July 1, 1993.

Analysts do not expect the company to regain profitability for at least two more quarters, and the company is expected to sell more assets to ensure that it has enough cash to survive near-term losses.

“They seem to be able to hold together for the near-term, but they may be forced to sell more assets or seek a strategic partner that would make an investment in them,” said Richard Whittington, an analyst at Kidder, Peabody & Co., an investment banking firm in New York.

Western Digital closed similar plants in Puerto Rico and Irvine this year. It now has only one circuit board plant, in South Korea.

The company has not decided what to do with that plant, Blair said. After the sale, Western Digital will have 6,191 employees worldwide, compared to more than 7,000 a year earlier.