Seagate to Cut Maxtor Jobs

Computer disk drive maker Seagate Technology said Monday that it would cut about 6,400 jobs after it completed its purchase of competitor Maxtor Corp. for $1.9 billion.

About half of Maxtor’s 12,800 positions will be eliminated, Woody Monroy, a spokesman for Grand Cayman-based Seagate, said.

Seagate agreed to buy Maxtor in December to help lower costs and increase its share of the $27.4-billion hard-drive market. The deal lets Seagate, which is benefiting from rising demand for laptops and digital video recorders that use disk drives, eliminate its largest rival while keeping its own staff intact.

“There will be no jobs lost at Seagate,” Monroy said. He said total restructuring costs would be $500 million. Monroy declined to be specific about costs directly related to the job cuts, which the company expects to complete by early 2007.

Shares of Seagate, which is run from Scotts Valley, Calif., fell 4 cents to $24.91. They have risen 27% since Dec. 21, when Seagate announced the deal.

Most of the Maxtor employees who will be offered jobs are in China, Monroy said.

Most of the jobs cut will be in the United States, said Seagate Chief Executive William Watkins.

“We did not want the Maxtor products. We did not want to integrate their management,” Watkins said. “Our plan going forward is to use only Seagate products.”

Seagate bought Maxtor for its customers and sales, he said.

“We wanted to take their customer base and replace it with our products and our cost structure,” he said.

The company might buy back stock or raise its dividend to return some of its cash to Seagate shareholders, Watkins said, while keeping enough money for possible new acquisitions.

Seagate said the purchase of Milpitas, Calif.-based Maxtor, completed Monday, would add 10% to 20% to earnings per share after the first year of combined operations.