Seagate Technology, the maker of hard disk drives, disclosed that it would eliminate 1,050 jobs or 2% of its global workforce as part of its restructuring plan.
The company recently stated its commitment to realign its cost structure with the current macroeconomic business environment. Last month, International Data Corp (IDC) forecasted a bigger drop in PC shipments this year due to a large inventory of notebooks and a strong dollar.
Seagate Technology estimated savings, pretax charges
Seagate Technology estimated to achieve approximately $113 million in saving annually after implementing its restructuring plan.
In a regulatory filing with the Securities and Exchange Commission (SEC), Seagate Technology indicated its expectation to complete a large part of its restructuring plan by the end of December 2015 quarter.
Seagate Technology estimated that its restructuring plan could result in total pretax charges of approximately $53 million. The company said it would incur the charges on the Septer quarter. The charges will be primarily related to employee termination costs. The company expected to make the majority of the cash payments in the December quarter.
Seagate Technology financial and stock performance
In July, Seagate Technology reported a net income of $138 million or $0.43 in diluted earnings per share for the fourth quarter. On a non-GAAP basis, its net income was $250 million or $0.77 in diluted earnings per share. The company’s revenue was $2.9 billion.
According to Seagate Technology Chairman and CEO Steve Luczo, the company “refined its financial model and global supply chain” over the past few years to be able to deliver significant value to shareholders continuously . Its efforts also allow the company to adapt effectively to short-term fluctuations in its business and geographic markets.
Over the past 52 weeks, the shares of Seagate Technology traded between $44.46 and $69.40 per share. The company lost more than 25% of stock value year-to-date.
The shares of Seagate Technology were trading at $49.29 per share, down by nearly 2% at the time of this writing, around 3:20 in the afternoon in New York.
Meanwhile, analysts at Deutsche Bank reaffirmed their Buy rating on the shares of Seagate Technology with a price target of $65, a potential upside of around 35%. Analysts at BMO Capital Markets reiterated their “market perform” rating and increased their price target to $48 from $43.