Orange County’s largest public company has switched its headquarters designation to Silicon Valley, a reminder of the influence and attraction of the world’s top tech center, and yet another hit to OC’s corporate base.
Western Digital Corp.’s official shift from Irvine to San Jose is a particular sting to the county’s diverse tech industry, which has lost several publicly traded companies over the past few years in a wave of consolidation.
“As we continue to focus on the transformation of the company, raising Western Digital’s profile in Silicon Valley as a leading technology company is an important move to positioning ourselves in the technology community,” a spokesperson told the Business Journal.
The headquarters designation change shouldn’t come as a big surprise to company watchers, as Western Digital Chief Executive Steve Milligan, President and Chief Operating Officer Michael Cordano, and Chief Financial Officer and Chief Strategy Officer Mark Long were already based at the company’s expansive Great Oaks campus in San Jose.
Long also serves as president of Western Digital Capital, the company’s San Jose-based venture arm, which has invested over $250 million in more than 20 startups.
Western Digital’s former headquarters at Park Place will remain a key operational hub, according to the company, though it didn’t respond when asked if the headquarters shift would affect those operations, including employment.
“We are committed to the Irvine campus and of the critical work that continues there,” the company said in a statement. “Irvine remains a primary location for multiple business management, engineering and functional support teams across key areas of our business.”
The 467,000-square-foot office houses research and development labs and administrative, marketing and sales departments, according to its annual report. And Western Digital’s enterprise solid-state drive division and other select teams from its client devices business are in the process of relocating to Irvine in an ongoing restructuring effort that the company says isn’t related to the headquarters change.
It acquired the corporate SSD business in 2013 in a $340 million deal for Santa Ana-based STEC Inc. The company, which employed about 200, provided Western Digital with a higher-margin business to complement its maturing client device line, a segment it’s led for years with its suite of hard and solid-state disk drives that go into computers, external storage devices, corporate networks and consumer electronics, such as tablets, gaming consoles and personal hard drives.
STEC’s customer roster was comprised of big original equipment makers, including IBM and HP, and data-center builders, such as EMC, now part of Dell Inc.
“The change in headquarters location is expected to have no impact to our customers and day-to-day business operations,” the company said.
Western Digital is the world’s largest disk drive maker, with revenue of nearly $13 billion in the 12 months through June, the end of its fiscal year.
It had a market value last week of about $24 billion, the highest in OC. Edwards Lifesciences is No. 2 with a market cap of about $19.9 billion.
Top Execs Up North
The headquarters change appears to be the latest step in a geographic shift that started with the acquisitions of San Jose-based HGST and SanDisk in 2012 and 2016, respectively (see related story below).
Milligan, a longtime Silicon Valley exec and HGST’s CEO at the time of the buy, has split his time between San Jose and Irvine since he took the top job in 2013. He’s been a board member of business trade association Silicon Valley Leadership Group since December 2014, the organization confirmed, and hasn’t taken a similar post in OC during that time.
Western Digital has continued to be philanthropically active in Orange County, signing on as a platinum sponsor of the Business Journal’s upcoming Civic 50 awards recognizing the county’s 50 most community-minded companies.
Chief Technology Officer Martin Fink, and Manish Bhatia, executive vice president of Silicon Operations at subsidiary WD, are based in the San Francisco area, according to their LinkedIn profiles.
Siva Sivaram, executive vice president, Memory Technology, lists on his LinkedIn page Los Gatos, known in tech circles as the home of Netflix Inc.
Sivaram and Bhatia joined Western Digital last year after its blockbuster $17 billion buy of SanDisk Corp. Sivaram held the same title at the Milpitas-based storage products maker, while Bhatia was executive vice president of worldwide operations.
Cordano, who assumed his roles in October 2015, had served as president of HGST, which was acquired for $4.8 billion.
Human resources executive Jacqueline DeMaria and Michael Ray, general counsel, chief legal officer and secretary, are the only two officers now listed in Orange County, according to their LinkedIn profiles.
Ray and Fink didn’t respond to Business Journal inquiries regarding their locations.
Restructuring Continues
The latest development comes during a new round of layoffs at Western Digital’s Irvine operation, a cut the company said isn’t related to the headquarters move.
The company plans to cut 51 workers, according to a recent filing with the state Employment Development Department.
“In response to an ever-changing industry, Western Digital Corporation is evaluating and transforming our business to ensure we deliver value to customers and remain competitive as a storage industry leader,” the company said. “We recently implemented a restructuring action affecting employees across business units and functional groups at several of our locations globally.”
The most recent round of layoffs will conclude by June 6, though it’s unclear whether the company plans more at the former headquarters.
The restructuring plan was fueled by the integration of SanDisk and HGST, which added nearly 50,000 employees.
Western Digital projected annual savings of $500 million in synergies and cost-cutting measures within 18 months of closing the SanDisk purchase. Wall Street has applauded the moves as investors pushed up the share price nearly 23% in the past year to $83.38.
Western Digital entered the year with an estimated 1,700 local employees, putting it at No. 50 on the Business Journal’s annual list of the largest employers here. That was down by about 200 employees year-over-year, or 11%.
The Business Journal reported in September that Western Digital will close three plants and cut 1,900 jobs in Asia in a shift of production to its sprawling Silicon Valley operation and elsewhere.
The company planned to close a 644,000-square-foot media production facility in Singapore and move the operations to Penang, Malaysia, and Shenzhen, China, where it owns and leases nearly 1.2 million square feet for hard drive and other manufacturing and administrative departments.
It will transfer its head slider production in Penang, where it runs a 1-million-square-foot plant, to facilities in BangPa-In, Thailand, and Laguna, Philippines.
Western Digital closed its 513,000-square-foot head wafer manufacturing facility in Odawara, Japan, and transferred that operation to a 392,000-square-foot facility in Fremont and its San Jose campus.
OC’s largest consumer electronics manufacturer initiated a restructuring plan last year that eliminated 180 positions, mostly in the U.S. and primarily in California, affecting engineers, managers and administrative personnel. That round followed a 115-person cut at its headquarters about two years ago.
The latest restructuring plan, which will be completed by year-end, consists of asset and property reductions, product development consolidation, and corporate structure realignment.
The company over about the past two years has shed about 20% of its real estate holdings as global PC sales sag, and shed roughly a quarter of its global workforce to about 72,000.
Thousands of more cuts are likely.
“We have additional plans to reduce that further,” Milligan said in an August analyst conference call, when he signaled that reductions could amount to 15,000 jobs or more.
