Quantum Corp is to re-structure its Hard Disk Drive Group in an attempt to compete more effectively in the sub-$700 PC market, and says it will cut its workforce by between 750 and 800 employees over the next year. As a result, it will record a special charge of around $50m in its current quarter, ending September 26. Once restructuring has been completed, Quantum expects to save around $100m a year in costs, fully realized beginning in fiscal year 2001.
Quantum Corp CEO Mike Brown recently accused Seagate Technology Inc of cutting its prices below cost on PC drives, and then forcing everyone else to do the same. This is unsustainable he said. We can’t go on when everyone is losing money. Nevertheless, Quantum now says that it views the high-growth low-cost PC sector as a huge opportunity and says it is confident that the changes it is making will give it a strong position in the market. The growth of the low-cost PC market has been a challenge for virtually every company in the PC supply chain, and Quantum is no exception said John Gannon, president of the
The HDDG – which since the end of July has been one of two separate tracking stocks on the New York Stock Exchange, along with the DSS Digital Linear Tape and Storage Systems Group – intends to increase its focus on technologies needed for high quality, low-cost desktop products, but says it won’t give up on high-performance 7,200 RPM drives. It will, however, be consolidating several unannounced product development programs, resulting in the immediate loss of 115 staff members from the desktop division. The rest of the 650 to 700 job cuts will be the result of streamlining logistics at configuration centers and warehouses in Milpitas, California and Dundalk in Ireland.
The company’s recently launched Fireball lct is Quantum’s first move into the sub-$700 PC market. The drive is currently being evaluated by all of the top five PC OEMs, and mass production and first customer shipments should begin next month.
CEO Brown said the actions were specifically aimed at adapting the business to market changes brought about by the rapid shift to low-cost PCs, and are not expected to offset the near-term impact of the competitive price pressures within the desktop drive industry. On that front, Quantum will continue to speak out strongly against the destructive pricing practices that are plaguing our industry.
Shares of disk drive makers, including Quantum, rose sharply over the last two days after computer distributor CHS Electronics Inc, the world’s third largest, indicated that the industry’s glut of inventory was easing and prices were showing signs of recovery.
