Hard drive maker Western Digital has announced it is laying off some 2,500 employees—or about five percent of its total worldwide workforce—as part of a series of cost-cutting moves designed to bolster the company’s bottom lines as the tough economy reduces demand for IT and storage products. The company is also scaling back its revenue forecasts for hard drive sales from $2 to $2.1 billion down to $1.7 to $1.8 billion…and scaling back executive compensation.
“In the current macro economic climate, we expect demand weakness to last well into the middle of the 2009 calendar year,” said WD president and CEO John Coyne, in a 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 also plans to scale back manufacturing work hours about about 20 percent through lowering temporary headcount, reducing overtime, and letting vacant positions in the company remain unfilled. Western Digital will also be closing one of its three hard drive manufacturing facilities in Thailand, closing or selling off one of its media substrate facilities in Malaysia, and cutting $250 million in capital spending.
Overall, the moves will cost Western Digital about $150 million, and should be completed by March 2009, but should save the company about $150 million per year.
Western Digital is just the latest high-tech company to annouce layoffs: AT&T, Yahoo, eBay, AMD, BT have all announced cuts, whlie retailers are also struggling, with Circuit City recently filing for bankruptcy protection.