14 DAY TRIAL // Western Digital, the worldwide leading provider of storage solutions, announced today its plans to reduce its workforce, too, as many leading industry players have been doing recently. WD announced that its cost restructuring strategy involved laying off a number of its employees, while also closing some of its manufacturing facilities.
“We expect demand weakness to last well into the middle of the 2009 calendar year,” John Coyne, president and CEO of WD, said in a statement. The hard disk drive manufacturer is currently facing increased competition in the pricing segment from rivals like Hitachi and Seagate, while the overall demand for hard disk drives has been continuously dropping in the recent few months.
The company announced that the revenue forecast for December had been lowered to $1.8 billion from the $2.15 billion previously projected. In order to cut operating expense, WD also unveiled a production freeze that would start on December 20, and end on January 1.
This solution is only a short term one, while in the long run, Western Digital's employees are those that will be affected. The company plans to cut back any bonus for executives, senior management and the board of directors, at the same time reducing employees' hourly schedules by 20 percent. The total capital spending is expected to be lowered by almost $250 million as a result of these changes.
The cost-cutting plan also involves laying off around 2,500 employees, representing 5 percent of its total workforce. In addition, the drive maker stated its plans to close down one of its three hard disk drive manufacturing plants in Thailand. At the same time, the company is thinking of closing down or selling one of its media substrate factories in Malaysia.
According to WD, the cutbacks are expected to save $150 million in the annual operating costs of the company.