Seagate Tops Earnings Forecasts, Still Lays Off 6,500 Employees
Seagate Technology may be raking in the dough, but it is still letting employees go. The company estimated fourth-quarter revenue higher than Wall Street expectations, however, it will lay of 6,500 employees by the end of the fiscal year of 2017.
Seagate Technology is an American data storage company best known for its hard drive disks (HDD). In just 2016 alone, Seagate announced the world's fastest and slimmest 2.5-inch HDD and debuted the world’s fastest NVMe SSD with 10GBps throughput.
Seagate headquarters in Cupertino, California
Seagate, however, has also faced a lot of heat. In February the company was entangled in a class action lawsuit for defective 3TB internal and external HDD’s. A reliability report in May also revealed that Seagate’s HDD’s have some of the highest failure rates.
The company has witnessed an increase in its revenue and gross margin, despite this past year’s controversies. Seagate expects to report revenue of approximately $2.65 billion, which is higher than the previous forecast of $2.33 billion (USD). It also will likely announce a gross margin of 25%, a 2% increase over the initial prediction.
Why are the results so much higher than the predictions? Steve Luczo, Chairman and Chief Executive Officer, remarked, “The evolution of mobile and cloud data driven environments continues to define itself as requiring significant amounts of mass storage. HDD devices are where most data bits ultimately reside and our record HDD exabyte shipments in the June quarter, particularly due to enterprise demand, continue to support this thesis.”
Seagate's NVMe SSD with 10GBps throughput
Seagate has more than 52,000 employees worldwide. In June, the company announced that it would cut 1,600 jobs in order to reign in costs amid a waning demand for HDD’s. In this latest report, however, Luczo noted that demand for HDD’s is up and will likely continue to increase.
The total pre-tax charges for the restructuring plan will be about $164 million (USD) during the current fiscal year.