Employees at Seagate Technology PLC (NASDAQ:STX) are in for a rough ride. The Dublin, Ireland-based company announced it was shuffling its management team and jettisoning 600 jobs after reporting disappointing fourth-quarter results.
The hard drive maker announced that fourth-quarter revenue (ended June 30) fell nine percent year-over-year to $2.4 billion. The company’s fourth-quarter net income came in at $114.0 million, or $0.38 per share; analysts had forecast fourth-quarter net income of $0.98 per share.
To reduce costs, Seagate said it would slash 600 jobs from the workforce, saving the company about $90.0 million. The company, which employs more than 50,000 people worldwide, did not say where the layoffs would come from.
Gutting its workforce is an annual trend at Seagate. In June 2016, the company announced it was cutting about 1,600 jobs, or three percent of its workforce, as it looked to rein in costs. Two weeks later, the company said it would cut another 6,500 employees by the end of 2017. Together, these job losses accounted for one out of every five employees.
Whether or not these recently announced job cuts are part of the previously announced round of layoffs isn’t clear.
Chances are that more layoffs are just around the corner. Industry analysts said the company’s earnings have been surprising to the downside and they expect that low growth to continue for at least the next two quarters.
Seagate also announced that Chief Executive Officer Steve Luczo would be stepping down from his post on October 1, when he becomes the company’s Executive Chairman. Seagate’s current President and Chief Operating Officer, Dave Mosley, will replace Luczo as CEO.
“It has been an honor and a privilege for me to have served as Seagate’s CEO in 16 of the last 20 years,” Luczo said in a statement. “I am excited about our future and I look forward to working with Dave in my new role as executive chairman at Seagate.”
The company has been struggling with internal issues and has had to cope with the rapid change of the storage market. Whether or not these restructuring efforts will revitalize the company and its share price is open for debate.
Over the last couple years, the company has resorted to gutting a large number of staff with no long-term benefit to its operations or share price.
“Seagate Technology Announces Planned Leadership Transition,” Seagate Technology PLC, July 25, 2017.
“Seagate Technology Reports Fiscal Fourth Quarter And Fiscal Year 2017 Financial Results,” Seagate Technology PLC, July 25, 2017.
“Seagate to cut 1,600 jobs in restructuring plan,” Reuters, June 29, 2016.
“Seagate Technology Announces Preliminary Financial Information For Fiscal Fourth Quarter And Year-End 2016,” Seagate Technology PLC, July 11, 2016.