The world’s largest hard drive manufacturer has announced it will cut 3,000 jobs amid a drop in orders and accusations of breaching Chinese sanctions.
Seagate’s shares dropped as much as 10 per cent as trading started in New York, closing 7.95 per cent down. They have lost more than half their value this year alone.
“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,” CEO Dave Mosley said in a statement, announcing the job cuts.
“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.”
The job cuts, which amount to roughly 7.5 per cent of Seagate’s work force, will lead to annual savings of A$170 million, according to Mosley.
Not surprisingly, the company’s third quarter earnings missed Wall Street expectations.
Sales for the period were A$3.14 billion, missing A$3.27 billion analysts.
Adjusted earnings per share were 48 cents (USD), far below estimates for 75 cents.
Seagate has also flagged revenue of US$1.85 billion for the current quarter, the company’s first sub-$2 billion quarter since 2005.
Financial woes aside, Seagate is also facing accusations by the US Commerce Department of violating US export rules.
The Department is accusing them of selling hard drives to a sanctioned company – which Reuters is reporting was Huawei.
Seagate deny the violation.
“Seagate’s position that it did not engage in prohibited conduct as alleged by the Bureau of Industry and Security, because, among other reasons, Seagate’s HDDs are not subject to the Export Administration Regulations,” the company said in a regulatory filing.
