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Western Digital announces job cuts

Western Digital announces job cuts

Western Digital is hoping its restructuring plans - which will see two manufacturing facilities closed and 2,500 jobs lost - can return it to profitability.

Western Digital has announced plans to reduce headcount worldwide as well as the closure of some of its manufacturing facilities.

John Coyne, chief executive officer of the hard drive manufacturer, has been quoted by BetaNews as saying that he expects the poor demand for storage products “to last well into the middle of the 2009 calendar year,” and has advised a new projected revenue for Q4 2008 at $1.8 billion – a significant drop from the $2.15 billion the company had previously forecast for that period. Coyne goes on to say that the company will be “taking additional steps to immediately reduce production capacity and operating expenses on a longer-term basis across our entire business as we approach the seasonally weaker second half of our fiscal year.

Due to the declining demand for storage products – and overproduction that has resulted in excess stock in the channel – the company has announced a freeze on production between 20th of December and the 1st of January in order to minimise losses.

This is far from the only cost-saving measure the company is taking, however: top-flight executives – cinluding the board of directors – will see their annual bonuses severely curtailed, employees will be called upon to cut their billable work hours by at least twenty percent, and various cutbacks will result in a projected reduction of around $250 million from capital expenditure.

As if that wasn't enough to keep shareholders hopeful, Western Digital is also to close one of its manufacturing plants in Thailand, along with the sale of a substrate factory in Malaysia. These closures, along with reductions in other areas, will leave around 2,500 jobless – about five percent of the company's overall workforce.

With the company seeing increased competition in the market along with a pricing war that has left it with ever-decreasing margins, investors must be hoping that tightening the company's belt now will save it from disaster further down the line.

Do you hope that Western Digital can weather this latest storm, or should it bow out gracefully and leave the market to others? Share your thoughts over in the forums.

1 Comment

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p3n 18th December 2008, 09:09 Quote
I realise they are scaling back production but these companies must have had some serious dead weight too, ul on the new year job hunters though :<
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