Disk Maker Seagate Lays Off 1,200 Staffers Worldwide

SAN JOSE —  Seagate Technology Inc., the largest independent disk drive maker, laid off 1,200 workers worldwide Friday in a cost-cutting move that is another sign of the recession in the computer industry.

“Everybody who is associated with computers, especially the personal computer market, is having an awful time,” said Paul Gillin, executive director of Computerworld magazine in Framingham, Mass. “Business has just ground to a halt, and prices are dropping through the floor.”

Julie Still, a spokeswoman for Scotts Valley, Calif.-based Seagate, said she did not have information on where the cuts would take place. The layoffs will affect about 18% of the company’s non-manufacturing work force in the United States and Europe.

She said the cuts won’t touch manufacturing, most of which is in Singapore. Seagate is cutting many U.S. management and sales jobs so it can continue making and shipping products.

“We are not seeing a great softening in demand, but we’re seeing severe price erosion because of intense competition,” Still said. “We’re concerned about profit margins, and so we’re cutting our overhead.”

In June, the Fortune 500 company that posted $2.4 billion in sales last year told investors that it would be, “at best, marginally profitable” in the quarter that ended June 30.

Earnings figures weren’t available for the most recent quarter, but Seagate predicted that sales would be below the $668 million reported in the comparable quarter last year. Profit during the quarter ended June 30, 1990, was $29.7 million.

During the third quarter ended March 31, Seagate reported net earnings of $25.3 million on $676.6 million in sales. That compared to earnings of $28.3 million on sales of $676.1 million in the 1990 quarter.

“This layoff is not at all unexpected,” said Jim Porter, a disk drive industry analyst for DiskTrend Inc. in Mountain View, Calif. “We’ve just finished the third quarter of recession in the personal computer industry, so it’s a no-growth situation for everybody associated with the industry.”

Porter said Seagate is struggling because the company hasn’t been geared up to concentrate on the only growing area of disk drive sales: those for notebook and laptop computers.

Now, Conner Peripherals Inc. of San Jose, one of the fastest-growing computer companies, leads sales for 2 1/2-inch and 3 1/2-inch hard disk drives.