Western Digital announces layoffs, fab closures


— 2:59 PM on December 18, 2008

The economy has apparently not been doing Western Digital any favors. The storage firm has trimmed its revenue forecast for the ongoing quarter, and it plans to "realign its cost structure" by closing fabs and firing 5% of its workforce, among other steps.

WD originally expected revenue between $2.03 billion and $2.15 billion for its second fiscal quarter, which ends on December 26. Because of reduced demand and "significantly more competitive" pricing across the industry, however, the hard drive maker now expects to make only $1.7-1.8 billion—a 22-26% year-over-year drop, if my math is right.

Here's the full list of steps WD plans to take to cut costs:

  • Reductions in compensation of the company's executive officers, board of directors, and senior management;

  • A reduction in worldwide headcount of approximately 2,500 people or five percent of the total workforce;

  • A reduction in manufacturing work hours of approximately 20 percent from reduced use of temporary workers, reduced shift overtime and employee attrition;

  • Closure of one of the company's three hard drive manufacturing facilities in Thailand;

  • Closure or disposal of one of the company's two media substrate manufacturing facilities in Malaysia; and

  • A reduction in capital spending for the fiscal year 2009 from $750 million to approximately $500 million.
  • All of these changes should happen by the end of March next year, WD predicts. The company will shoulder a resulting charge of around $150 million across this fiscal quarter and the next, but it expects to save $150 million annually from then on.

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