Low Demand Compels Seagate to Cut Jobs


Published Date : Jun 29, 2016

In the aftermath of poor results in the third quarter ending in April 2016 and cutting down jobs, Seagate Technology PLC has announced that the company will cut down further 1,600 more jobs that constitute around 3% of the total workforce. Seagate is a top player in the global market for drives for the storage of data in personal computers. However, the market for drives for PCs has shrunk considerably with the introduction of cloud storage. To keep up with the current trends in the industry, Seagate acquired Dot Hill Systems Corp. last October for US$696 mn.

Introduction of Cloud Technology has Affected Demand for Storage Drives

To keep the operation costs low, Seagate is focusing on job cuts, thereby compensating for the poor performance in the third quarter of 2015-2016. The company offered a new chief financial officer in October last year. This time, William D. Mosley has been appointed as the new president and chief operating officer. The revenue dipped by 22% to US$2.6 bn in the third quarter of the financial year 2015-2016. The company’s competitor Western Digital Corp. also registered a 21% decline in the revenue in the April 1 quarter. 

It has been observed that with the development of the cloud technology, these drive manufacturers have witnessed a weak demand for their products as an increasing number of PC users are resorting to cloud silos for saving their personal data. As a result, these companies are also focussing on partnerships and acquisitions of firms working on the cloud technology to increase their expertise in the area. However, till the time these companies register demand for their products, job cuts are imminent.