Struggling Western Digital Names Massengill CEO, Elects Chairman
Western Digital Corp., turning to its top internal candidate to succeed outgoing chief executive Charles Haggerty, said Thursday that Matthew E. Massengill was named president and CEO.
Massengill, 38, has been with the struggling Irvine disk drive manufacturer for 14 years, most recently as chief operating officer. He emerged as the leading in-house candidate after a co-chief operating officer, Russell Stern, resigned in October.
The company also announced that Thomas E. Pardun, president of MediaOne International-Asia/Pacific and a Western Digital director since 1993, was elected chairman of Western’s board of directors.
Pardun, 56, will become chairman after the pending merger between AT&T; Corp. and the MediaOne Group Inc. is complete.
The two men replace Haggerty, 58, who after a six-year tenure of guiding one of the world’s largest disk-drive makers through periods of explosive growth and a devastating slump, announced last summer that he would retire.
Haggerty has been Western Digital’s president, chief executive and chairman. He will remain chairman until Pardun takes over.
The management changes stem from a year-long, corporate-wide reorganization, which has included massive layoffs, huge losses and the streamlining of product lines. The company, which last year sold off some of its operations and shut down a plant in Singapore, now employs just under 10,000 people, down from more than 16,000 in 1997. In addition, Western Digital has suffered eight consecutive quarterly losses, for a total of $952 million in red ink.
“We’ve been very focused on being a computer drive company,” said Massengill, who lives in Laguna Niguel with his wife and daughter. “I think we have the ability to focus our core business . . . and create other new business opportunities.”
Massengill joined Western Digital in 1985 as a product engineer. For many years, he worked in the company’s division that developed high-end disk drives, a unit formerly led by Kathryn A. Braun.
When Braun left the company in August 1998, Massengill filled her spot. Industry observers were shocked by Braun’s departure; they had expected Orange County’s highest-paid female executive to someday become Western Digital’s CEO.
But company insiders said that Massengill’s promotion was well-timed, as he played a crucial role in helping to build Western Digital’s then-tiny desktop division into a leading product supplier in the computer industry.
He also helped the company, which has been in the throes of a three-year industrywide slump in desktop computer storage prices, overhaul its operations.
Hoping to trim costs last year, Western Digital established two major units--a worldwide operations structure under then-Executive Vice President Massengill, and a research and development organization headed by then-Senior Vice President Stern. Both men were named as internal candidates to replace Haggerty.
The company also retained an executive search firm to look for his successor.
“We had three very strong and viable candidates: two outside and Matt,” Haggerty said Thursday. “Quite honestly, it took an all-day meeting to sort this thing out. But at the end of it, we had a unanimous vote in favor of Matt.”
Massengill acknowledged that “we have many hurdles to overcome.” The company’s biggest hurdle, say analysts, is returning to profitability.
Analysts predict that Western Digital won’t break even until late this year.
Hoping to speed the turn-around, Massengill said the company will continue to diversify its revenue stream.
By 2002, Western Digital officials say they hope desktop computer hard drives, their core business, will make up “a much smaller” piece of the company overall revenues, said spokesman Robert Blair. Today, 100% of Western Digital’s revenues come from hard drives--and more than 90% of that is drives for desktop computers.
Storage subsystems, storage management software and audiovisual consumer products are expected to generate “much more” of Western Digital’s overall revenues by then, Blair said.
The company already has begun initiatives with Sony Corp. to develop audio-visual digital storage systems for consumer electronics products such as VCRs. Earlier this year, Western Digital acquired Crag Technologies, a San Jose firm that develops storage management software.
But those efforts are in their infancy, and several competitors have adopted similar strategies. To continue cutting costs, Western Digital has farmed out several functions and shifted its manufacturing facilities from Singapore to Malaysia, where labor costs are lower.
Thursday’s news came after markets closed. Western Digital shares fell 25 cents, to $4.31, in New York Stock Exchange trading.
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Western Digital Corp. at a Glance:
Headquarters: Irvine
Operations: Designs and manufactures computer hard drives
Chairman: Thomas E. Pardun
President/CEO: Matthew E. Massengill
Employees: 10,000, including 700 in Orange County
Earnings* (millions)
1999 -- $ -492.7
1998 -- -290.2
1997 -- 267.6
1996 -- 96.9
1995 -- 102.8
Sales* (billions)
1999 -- $ 2.8
1998 -- 3.5
1997 -- 4.2
1996 -- 2.9
1995 -- 2.1
*Fiscal year ended in June
*
Matthew E. Massengill
Age: 38
New position: President, chief executive officer
Previous position: Chief operating officer.
Background: Joined Western Digital as a product engineer in 1985, held various engineering and marketing positions in the company’s desktop hard drive business. Executive vice president and general manager of worldwide hard drive operations, including research, development, manufacturing and marketing of the company’s line of hard drives.
Education: Purdue University, engineering degree
Personal: Married, one daughter.
Residence: Laguna Niguel
*
Tomas E. Pardun
Age: 56
New position: Chairman
Previous position: President, MediaOne International-Asia/Pacific. Retiring when MediaOne merges with AT&T; Corp.
Background: Western Digital director since 1993. 35 years in media, telecommunications, computer industries. Pardun previously was president and chief executive officer of U S WEST Multimedia Communications (MediaOne became a separate company from U S WEST in 1998). During his 12 years at U S WEST/MediaOne, Pardun held senior management positions including vice president and general-manager of business and government services and vice president of marketing and planning for U S WEST Communications.
Education: University of Iowa, economics degree.
Personal: Married, two sons.
Residences: Denver and Incline Village, Nev.
SOURCES: Western Digital Corp., Bloomberg News
