Seagate Technology Trims Workforce by 1%

Seagate Technology is laying off 500 of its workers around the world to 'align resources to better support future growth prospects.'
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Seagate Technology  (STX) - Get Report shares were steady Tuesday after the disc-drive maker announced it will lay off 500 employees, or 1% of its total workforce, in 12 countries.

In a filing with the Securities and Exchange Commission, the company said it will “continue to align resources to better support future growth prospects.”

It’s also consolidating its two Minnesota facilities into one location. 

“The company believes the Minnesota consolidation will provide greater collaboration opportunities and drive economies of scale,” Seagate said in the filing.

Unlike some companies dumping workers during the coronavirus pandemic, Seagate hasn’t suffered diminished revenue. For the quarter ended April 3, sales totaled $2.718 billion, up 18% from $2.313 billion a year earlier.

“The adoption of the Plan is not due to recent, near-term market and economic conditions,” the filing said.

The company expects the moves to create pretax charges of approximately $74 million, mainly in fiscal 2020.

These charges include approximately $57 million of cash expenditure for employee termination costs.

Morningstar analyst Abhinav Davuluri gave Seagate high marks in late April, after the company's last earnings report.

“Management highlighted the impact of Covid-19 on the supply side, as manufacturing facilities were temporarily shut down during the first half of the quarter,” he wrote.

“However, the transition to a remote environment across the world has driven an accelerated demand for data storage, and we think Seagate will be able to capitalize on these secular trends in the near term.”

Seagate shares recently traded at $52.16, up 0.03% and have gained 9% over the last three months.