Wednesday, April 5, 2006
In the process of being acquired by rival Seagate Technology LLC, Maxtor Corp. announced Tuesday (April 4) it would cut 900 jobs as the troubled disk drive supplier slashes production.
Maxtor (Milpitas, Calif.) said lower than expected unit volume growth, largely attributable to the pending acquisition, was responsible for the cutbacks. The company expects to take a $6 million first-quarter charge for severance-related expenses.
In addition, Maxtor blamed the pending acquisition for failure to achieve anticipated component cost improvements, resulting in a paltry gross margin of 2 percent.
Maxtor expects to post a loss of $100 to $104 million, or 39 to 40 cents per share on sales of $875 to $885 million in its first fiscal 2006 quarter ended April 1.
Plagued by losses and falling margins, Maxtor agreed in December to be acquired by Seagate for $1.9 billion in stock. The deal is expected to close in the second half of 2006.
Seagate, the largest disk drive supplier, is thriving at the expense of weaker rivals. The company announced in late March it would invest $300 million into its Woodlands, Singapore plant and add 1,500 to 2,000 new workers to bolster production and R&D.
By: DocMemory
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