Maxtor cuts jobs to avoid financial crisis
Maxtor cuts jobs to avoid financial crisis
Maxtor is planning to shed 400-500 jobs in an attempt to recover from losses made over the last year because of competition over pricing which forced a delay in shipments as buyers waited for the best deals.
The company is expecting to record a net loss of US$20 to US$30 million on a U.S. General Accepted Accountancy Principles basis, despite its total revenue including a gain of US$24.8 million from a lawsuit settlement by Maxtor against Koninklijke Phillips Electronics N.V., related to a quality issue on a legacy Quantum product.
Paul Tufano, the president and chief executive officer for Maxtor, said. "We are extremely disappointed in our second quarter performance, which was the result of a very aggressive pricing environment in both the OEM and distribution channels and lower than expected unit shipments, primarily to distributors.
"During the quarter, we took steps to control costs and expenses to partially offset the shortfall in volume and revenue. We will continue our efforts to cut costs and lower the breakeven point of the company through a reduction in force, beginning this month."
Maxtor's shipments in the second quarter were about 10 percent less than initial guidance expectations.
Due to price declines, the average selling price in the second quarter is expected to be US$71, which is a US$4 decline on the first quarter.
The company took aggressive actions during the quarter to reduce costs, which partially offset the impact of the projected shortfall.
The company hopes that by shedding 400-500 jobs by the third quarter and the end of the year, this will reduce costs and expenses by US$60 to US$80 million annually.
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