Storage products maker Western Digital Corp. will shed 115 jobs from its Irvine headquarters as part of a “moderate restructuring” in response to sagging global PC sales.
The cuts from its WD subsidiary will conclude in about a month, according to a filing with California’s Employment Development Department.
The move aims to align “resources with the current market conditions for our products,” the company told the Business Journal in a statement.
Western Digital is the world’s largest hard disk drive maker in units sold and revenue. The company had about 1,900 workers in Irvine through March, when it was the third largest local employer among public companies based here, according to Business Journal research.
The latest development dovetails with Western Digital’s ongoing effort to align production levels at its primary plants in Thailand and other locations across the world with the changing habits of consumers and businesses. Customers in both segments are continuing to shift away from PCs to mobile devices while relying increasingly on cloud storage in place of physical products, such as hard drives.
WD has slashed about 25,000 jobs around the world in the past three years and now employs roughly 81,000.
“We have worked that head count level down over time primarily through attrition,” Chief Executive Steve Milligan said in a recent conference call with analysts.
Milligan, who took the helm in January 2013 after the retirement of John Coyne, garnered Wall Street kudos for reshaping the HGST unit of Japan-based Hitachi Ltd. from an unprofitable operation into a thriving global competitor and spinoff candidate before it was acquired by Western Digital in 2012 for $4.8 billion in its largest deal to date.
Regulators in China have yet to approve the massive integration that includes 41,000 employees and operations around the globe. Western Digital stands to improve margins and profits, boost sales with uniformed pricing, and save some $400 million in annual costs by cutting redundancies.
Western Digital management continues to negotiate with China’s Ministry of Commerce, but frustrations appear to be mounting.
“I am encouraged by the frequency of those communications and the substance of those communications,” Milligan said. “Where I am not pleased is with regards to the pace of decision-making or the transparency of that decision-making. That is where the frustration is.”
Western Digital posted sales of $3.5 billion and adjusted profits topping $441 million in the March quarter, both narrowly missing Wall Street expectations. The company sold 54.5 million hard drive units compared to 61 million units shipped in the December quarter.
The results were driven by “PC demand challenges that were largely driven by weak macro-economic conditions,” according to Milligan, who said he expects a rebound in the second half of the year led by the gaming sector.
Global PC sales in the first quarter hit 71.7 million units, down 5.2% from the same period a year earlier, according to Stamford, Conn.-based Gartner Inc.
The market tracker forecasts that shipments of desktops, notebooks and “premium ultramobile” PCs, which includes Apple’s MacBook Air, will drop 2.4% this year to 306 million units.
Western Digital’s hard disk drives go into computers, external storage devices, corporate networks and consumer electronics, such as laptops.
Hard drives use spinning disks to store data, unlike the company’s growing line of solid-state drives, which use chips.
The growing SSD segment, geared for business customers, turned a profit in the March quarter, with revenue topping $224 million, up 67% from a year earlier.
