Seagate Tells Workers To Stay Home During Holidays

Seagate Technology on Wednesday told investors it is slashing its revenue expectations for the quarter and mandating unpaid furloughs for much of its staff during the holidays as a cost-cutting measure.

The storage vendor said at the Barclays 2008 Global Technology conference that it expects revenue for the current quarter to be in the range of $2.3 billion to $2.6 billion. As a result, company executives said, its operating results are expected to be below the expectations it previously announced.

Seagate on October 22 said during its first fiscal quarter of 2009 financial call that it expected revenue for its second quarter to be between $2.85 billion and $3.05 billion.

Seagate told investors that it is accelerating its ongoing plans to rationalize production capacity and improve its overall cost structure, and expects to provide additional information about such plans next month.

Seagate is instituting targeted furloughs over the holidays in order to cut costs and get production capacity in line with the business environment, a company spokesperson said. However, the spokesperson said, the company does not feel inventory is out of line with current conditions.

Employees in Seagate's main U.S. offices will be furloughed without pay from December 22 through the new year, while furlough times may vary in other countries, the spokesperson said. Workers can take advantage of unused vacation time to get paid during the furloughs, a company spokesman said.

Seagate is not looking to close production lines at this time, the spokesperson said.

The move corresponds to a slowdown in the hard drive industry. Analyst firm iSuppli said earlier this month that a global slowdown in the demand for PCs and other electronic products means that global shipments of hard drives will be flat at best, and could actually decline during the fourth quarter of 2008, compared to the third quarter.

ISuppli's more optimistic and more likely forecast calls for global hard drive shipments of 157.5 million units, essentially flat with the 158.3 million shipped in the third quarter, meaning that total 2008 shipments would be up about 15 percent compared to 2007.

In its pessimistic forecast, iSuppli said fourth-quarter shipments could be as low as 149.4 million units, about 10 percent less than originally forecast in September. Meanwhile, average selling prices will continue to fall, putting a drag on overall vendor revenues, iSuppli said.

ISuppli also said that 2009 hard drive shipments could grow as high as 6.8 percent or as low as 4.3 percent over 2008, and that growth would be fueled by demand from notebook PC and server markets.

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