Western Digital, in Bid to Narrow Its Losses, Will Lay Off Up to 750
Western Digital Corp. said Tuesday that it will lay off up to 750 employees worldwide, including 70 in Orange County, as part of a restructuring aimed at continuing the company’s loss-cutting efforts.
The Irvine-based computer hard-drive manufacturer, still recovering from an industrywide downturn, said it lost $82.3 million in its fiscal 1999 second quarter, an improvement on the $145.2 million loss in the same period last year--a quarter marred by a one-time charge of $148 million related to reducing production.
Revenue for the period ended Dec. 31 was $738.6 million, down 24% from $969.6 million.
Like its industry peers, the world’s third-largest independent manufacturer of disk drives has suffered from razor-thin margins, excess inventories and the loss of business caused by Asia’s economic slowdown.
The company said it will combine the marketing, research and development, manufacturing and procurement of its personal computer storage and enterprise storage divisions into a single hard-disk drive unit as part of its restructuring.
Most of the job cuts will occur in Singapore, where the company plans to consolidate its two plants into a single factory over the next two months. The company also operates a plant in Kuala Lumpur, Malaysia.
Company officials did not say how many cuts would occur in the U.S., but did say the 70 Orange County employees, mostly in sales and administrative functions, were terminated Tuesday.
Western Digital now has about 730 employees at its headquarters. When the new round of layoffs is completed, it will have 12,000 employees worldwide, down from a high of 16,000 in October 1997.
The restructuring is designed to eliminate redundant activities in the desktop hard drive and enterprise storage divisions, which already have customers, suppliers, technologies and manufacturing techniques in common, the company said.
“Our customers and suppliers indicated that they wanted to work with one Western Digital, not two divisions,” said Chief Executive Chuck Haggerty.
The company also filed papers with regulators to sell up to $190 million in common stock over the next two years to raise money for general corporate purposes.
Overall, the company was upbeat about its future, saying it expected to reach a break-even point during the quarter ending Sept. 30, slightly ahead of analysts’ expectations. Financial analysts estimate the company will post a loss of 10 cents per share that quarter, according to First Call Corp.
The company’s second-quarter results, reported after the market closed Tuesday, also beat analysts’ expectations with a loss of 93 cents a share. A 99-cent loss had been predicted.
“PC sales went up and that helped them quite a bit--more than expected,” said Jean W. Orr, a Nutmeg Securities Ltd. analyst who follows the company.
Western Digital’s stock price fell 63 cents Tuesday to close at $19.25 on the New York Stock Exchange.
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An Improvement, of Sorts
Irvine-based Western Digital Corp. posted a fifth consecutive losing quarter. The company’s second-quarter results beat analyst estimates, though, and were much lower than a year ago. Net sales and earnings, in millions:
Sales
1998
1st qtr.: $1,090.2
1999
2nd qtr.: $738.6
Earnings
1998
1st qtr.: $62.7
1999
2nd qtr.: -$82.3
Source: Bloomberg News
