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Hard drive maker Seagate Technology said on Wednesday that it plans to cut 8% of its global workforce, or about 3,000 employees, citing economic uncertainty and declining demand for its parts.
“In addition to adjusting our production, to drive supply discipline and price stability, we are implementing a restructuring plan to sustainably lower costs, including reducing our global workforce,” said Dave Mosley, CEO of Seagate, on a call with analysts.
The restructuring plan was announced after Seagate reported fiscal first-quarter earnings that missed Wall Street expectations for revenue and earnings per share.
Seagate shares fell more than 7% in trading on Wednesday and are down more than 55% so far in 2022.
Mosley added that Seagate’s customers, which include cloud providers, have a buildup of parts inventory because they are spending less on computers. He said he does not expect Seagate customers to finish using their parts backlog in the current quarter.
Mosley said the company will continue to pay a dividend.
Seagate makes hard drives and other parts commonly used in computers and cloud servers.
Seagate’s layoffs and lower demand are the latest sign that demand for PCs and cloud servers is deteriorating after two booming years fueled by the pandemic.
on tuesday, Microsoft, which makes the operating system for most computers, reported that Windows license sales fell 15% on an annual basis. Microsoft’s cloud business also fell short against expectations.
Seagate said its restructuring plan, which includes the layoffs, would save the company about $110 million a year and be completed by the end of the company’s March quarter. It said it expects to incur pre-tax charges of about $65 million, mostly for severance and other termination benefits.
Seagate reported adjusted fiscal first-quarter earnings of 48 cents per share on Wednesday, significantly below FactSet consensus expectations of 71 cents per share.
Seagate’s revenue was $2.04 billion, which also came in below the FactSet consensus of $2.1 billion.
Seagate said it expected $1.85 billion in revenue in the current quarter, below FactSet expectations of $2.12 billion.