Maxtor cans notebook HDD project

Up to $16m to cover cost of cancellation

By Tony Smith, 25th January 2005

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Maxtor has abandoned plans to offer 2.5in hard drives - essentially turning its back on the growing notebook market - the HDD maker said yesterday

The company's NYSE-traded shares fell 4.4 per cent to close at $4.36 on the news. The 2.5in drive family was to have shipped later this year.

Killing the project will cost. Maxtor said it will take a one-off charge of $5.4-7m. It is also committed to spending a further $7.6-9m to pay third-parties for components and tools necessary to the project.

Demand for 2.5in drives, used primarily in notebook computers, is growing, but desktop unit shipments still far outweigh those going into laptops. Quite apart from desktop and server applications, the larger drives are increasingly finding a home in consumer electronics kit, and it's these roles that Maxtor presumably feels it makes more sense to focus its endeavours upon for now.

The 2.5in drive project's cancellation is one of the first major acts made by the company's new management team, President and COO Michael Wingert, and Chairman and CEO C S Park, both of whom took up their current roles last November following theunexpected resignation of then-CEO Paul Tufano. ®

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