Western Digital To Cut About 2,500 Jobs

According to a Western Digital press release, the Lake Forest, Calif.-based vendor also will reduce compensation of the company's executive officers, board of directors and senior management; reduce manufacturing work hours by 20 percent through fewer temporary workers, less shift overtime and employee attrition; close one of its three hard-drive manufacturing plants in Thailand; close one of its two substrate manufacturing plants in Malaysia; and reduce capital spending for fiscal year 2009 by about $250 million.

"In the current macroeconomic climate, we expect demand weakness to last well into the middle of the 2009 calendar year," said President and CEO John Coyne in the statement. "Consequently, we are taking additional steps to immediately reduce production capacity and operating expenses on a longer-term basis across our entire business as we approach the seasonally weaker second half of our fiscal year."

Western Digital spokespeople said the demand for hard drives in the company's second fiscal quarter, ending Dec. 26, is "significantly below the expectations outlined in the company's original revenue guidance range of $2.025 billion to $2.150 billion." Western Digital said it now expects revenue for its December quarter to be between $1.7 billion and $1.8 billion.

Coyne expects Western Digital's restructuring to be completed by March 2009 and for the company to incur $150 million in charges comprising asset impairment, employee termination costs and other exit costs. The vendor expects to generate $150 million in annual savings, according to the statement.

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"We are taking these actions in order to strengthen our financial position and enhance the ability of our business to withstand an extended period of depressed demand while continuing to invest in the technologies, products and processes required to assure the continued success of our business," Coyne said.