WD junks SCSI as HDD wars take toll

3400 layoffs at Seagate and WD

Seagate is issuing redundancies to 2900 workers in Thailand, and smaller rival Western Digital is putting 420 staff on the job scrap heap. Seagate says the staff cuts are the latest round of the reorganisation last year which will see the company reduce its 77,000 headcount by ten per cent this September. As an indicator of financial health, Western Digital’s lay-offs look more serious -- the company is throwing in the towel in the SCSI disk sector, citing declining share and increased competition in what it calls the enterprise storage market. WD will concentrate all its efforts now on building HDDs for desktop PCs. The company today announced that its net loss for the quarter ended 31 December, is expected to be in the range of $67-70 million, compared with Wall Street forecasts of $100 million "before special charges". It looks like WD did well out of the consumer PC sales rush, if not enough to actually make a profit. Seagate also beat analyst predictions in its most recent fiscal quarter, but it says the hard drive market remains very competitive. Meanwhile, Quantum's hard disk drive group announced its figures for its third quarter ended 26 December 1999. Sales were $889 million on record shipments of 8.7 million units. Net income was $5.2 million. The company attributed the sequential improvement in gross margins (Q2: 2.9 per cent; Q3: 11.7 per cent) to better industry conditions and improved execution. The HDD group generated $71 million in cash from operations in the December quarter and achieved a record 34 inventory turns. Adaptec, a company that knows how to make money from SCSI, also posted some rosy results yesterday, announcing net income for its Q3 up 27 per cent to $31.7 million. The company has laid off 975 staff in the past two years. ®

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