Seagate announced Thursday that it has initiated a restructuring plan that includes laying off approximately 1,100 employees, or 2.5 percent of the company's global workforce.
According to the hard-drive maker, this reduction is required to support a targeted product development, marketing, and administrative costs of less than US$300 million per quarter. In addition, it will also help position the company to be cash flow and earnings positive within its fiscal year 2010.
Seagate expects the layoffs to be completed by the end of July and result in total pretax restructuring charges of approximately US$72 million. These charges, primarily incurred in the June 2009 quarter, consist mainly of cash-based employee termination costs, which are expected to be substantially paid in the September 2009 quarter.
All in all, the annual savings generated from this restructuring action is expected to be approximately US$125 million.
This is the company's second round of layoffs. The first one was announced in January with about 800 people affected. Since then the company has been continuing to reduce its global headcount through attrition and restructuring, resulting in a reduction in the company's labor costs in excess of 25 percent.
Other than letting people go, Seagate has previously announced the realignment of its organizational structure to increase efficiency, including the closures of two recording media facilities and its Pittsburgh research facility, company-wide salary reductions, and other cost reduction initiatives.
Seagate's main competitor, Western Digital also laid off 2,500 employees back in December 2008, but the company reported positive earning with the net income of US$50 million for its fiscal third quarter that ended on March 27.
This article was first published as a blog post on CNET News.
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