Seagate sent its top two executives packing this morning, and they’ll be followed by 10% of the U.S. staff by the end of the month.
The surprising moves are the latest sign that all is not well with the disk drive maker, which already cut its revenue forecast for last quarter from $3.05 billion to $2.85 billion.
Former CEO and current chairman Stephen Luczo is replacing CEO Bill Watkins, who will stay on as an adviser to Luczo according to Seagate’s news release. What Seagate didn’t put in its release – but added in its SEC filing – is that president Dave Wickersham resigned and will be replaced by current CTO Bob Whitmore.
The SEC filing also confirmed the layoff of 10% of the U.S. workforce, saying the cuts will “impact a broad range of departments, including research and development” and are the results of the troubled economy. Seagate will probably give more details of the executive changes and layoffs when it reports earnings Jan. 21.
Financial analyst Aaron Rakers of Stifel Financial Corp. says the changes show that things might be even worse than anybody thought at Seagate. He says while it’s a good sign that Seagate is making the tough decisions to realign the company after recent struggles, the shakeup could be “a signal that more meaningful negatives are going on within the company.”
Luczo was an investment banker for Bear, Stearns & Co., before becoming Seagate’s CEO from 1998-2004. During that period, Seagate went private in 2000 before re-emerging as a public company in 2002. He is also on the board of storage system vendor Xiotech, which Seagate spun out during Luczo’s term as CEO.