Seagate lays off 70 Longmont employees in 'work force optimization'
Total of 1,000 jobs cut worldwide
By Shay Castle
Staff Writer
POSTED: 09/09/2015 05:57:25 PM MDT | UPDATED: ABOUT 16 HOURS AGO
Data storage company Seagate (NYSE:STX) confirmed Wednesday it was cutting just under 70 jobs at its Longmont design center, part of a global "work force optimization" that resulted in 1,000 jobs being eliminated, a 2 percent reduction.
"Given the complexities of Seagate's markets and business, along with the investments that need to be made, it is necessary that the company continually review its operations and spending, making adjustments as needed. Unfortunately, at times, the work force is affected by these decisions," company officials said in a written statement.
Seagate, one of the largest private employers in the area, employed over 1,000 people at its Longmont facility.
The cuts had been anticipated for months by many employees.
"I knew the company was trying to reduce costs due to economic factors," said Eric Budd, who was informed that he would be laid off on Wednesday morning. "I didn't know personally that I would lose my job, but that's the environment we were operating in."
Recent posts on a Seagate forum at layoff.com have been sharing rumors of cuts in several cities, including a thread that pinpointed the exact date of the layoffs.
Analysts had been watching the company as well because of its weakening earnings.
"We downgraded them just last week," said Mark Miller, an analyst with Menlo Park, Calif.-based The Benchmark Company. "We're definitely concerned about them."
Miller said that Seagate's earnings have dropped significantly over the past three years — down more than 35 percent, compared to 7.5 percent at peer Western Digital.
In 2013, net income at Seagate was $1.83 billion, but by the end of its fiscal year July 3, net income was down to $1.12 billion, excluding a one-time gain from a $620 million legal settlement, Miller said.
Seagate's $2.5 billion share buy back, which began in April, has reduced the number of shares outstanding and increased earnings per share, but that has also served to mask the overall reduction in earnings, Miller said.
Miller also said the company's cash position appeared weak, especially in light of its recent $694 million purchase of Longmont-based competitor Dot Hill Systems.
"That's why I think they're taking these measures," Miller said. "It's not the best scenario when you've got to cut people and reduce costs just to make your earnings look good."
Globally, Seagate, which is headquartered in Cupertino, Calif., employs more than 55,000 and operates in more than a dozen countries.
Now ex-Seagate employee Budd, who worked at the company for seven years, was remarkably optimistic for a newly unemployed man.
"I'm not terribly worried," he said. "Seagate provides a pretty generous severance package, and I always try to set myself up in a financial situation that allows for flexibility.
"I'll be OK."