StorageTek lays off 500 staff

Storage Technology will cut around 500 staff and take a hit of netween $20 million and $25 million. The US network storage vendor today warned it would lay off around half the employees in the second quarter. The moves are expected to save around $40 million a year. It expects to earn between 5 and 10 cents a share for the first quarter, down on First Call analysts’ estimates of 42 cents a share. StorageTek blamed a slow pickup of its Virtual Storage Manager system and "manufacturing constraints" on its 9840 tape drive. "A shortfall in sales of these higher-margin products led to lower-than-expected gross margins," said CEO David Weiss in a statement. "Compounding the revenue and margin weakness, operating expenses have increased significantly over last year," according to PC Week. The company has 8,700 employees. Its shares were down 8 cents this afternoon at 18 cents. ®