Seagate to Cut 6% of Global Staff

The pay cuts will take effect in February.

A company spokesman, Woody Monroy, would only say Wednesday that the moves are designed to reduce Seagate's costs as the computer industry as a whole suffers from sluggish sales because of the economic meltdown.

"It's widely known our customers are feeling the pain of the business environment as well, and that obviously has an impact on us," he said.

The back-to-back announcements signal a deeper retrenchment than Wall Street anticipated, sending shares down 23 cents, or 5 percent, to $4.35 in midday trading. The week's news has rattled investors because it looks like Seagate's financial problems are worse than expected and that management is conflicted about the company's direction.

Besides the layoffs, Seagate revealed another big element of its restructuring earlier this week with two major changes at the top. William Watkins, 56, Seagate's CEO since 2004, and Dave Wickersham, 52, the president and chief operating officer, both abruptly left the company.

Watkins was replaced by Stephen Luczo, 51, a former investment banker who oversaw a brutal downsizing in his six years as Seagate's CEO before Watkins, and Wickersham's jobs were taken by Robert Whitmore, 46, executive vice president and chief technology officer.

Seagate has declined to make the executives available for comment.

Seagate has already warned that its latest quarterly results would fall below Wall Street's forecasts. In December the company lowered its fiscal second-quarter sales guidance by about $500 million. Seagate will report its full quarterly results Jan. 21.